T

he prolonged government process for approving Royal Dutch Shell’s proposed acquisition of a 30 percent stake in the Masela Block has delayed the oil-and-gas giant from planting their intended footprint in the upstream sector, especially in regards to a planned floating LNG plant.

Shell, which is currently focusing its Indonesian businesses in the downstream area and has been famous for its retail products, has been planning to begin its first upstream venture in the Masela project in the Arafura Sea, Maluku.

The block measures some 3,221 square kilometers in area with depths of between 300 and 1,000 meters.

“We have the expertise and skills in floating LNG. We want to share our footprint in natural gas. To bring this project to life, we are looking forward to the Indonesian government’s approval,” Shell chief executive officer Voser told dozens of international journalists, including The Jakarta Post, in Singapore on Monday.

“This project can generate significant revenue for the Indonesian government and the Indonesian people,” he added.

The government approved a plan to set up a floating liquefied natural gas (FLNG) plant in December 2010. The plant would have an estimated annual production capacity of 2.5 million tons for the first developmental phase at Masela block Abadi gas field.

Japan-based Inpex Corporation announced on July 22 that it had transferred its 30 percent stake in the Masela block to Shell Upstream Overseas Services, a subsidiary of the Anglo-Dutch Royal Dutch Shell, in a bid to find a capable offshore operations partner.

State oil-and-gas firm PT Pertamina would hold the remaining 10 percent.

“We are the biggest LNG player in the world. We are the only company actually working on floating LNG, so we have a lot to offer in terms of skill and innovation and technology,” Voser said.

Shell announced earlier this year that it would build the world’s first floating LNG facility in Australia, called the Prelude project.

With an estimated cost of US$11.5 billion, the Prelude project is expected to be the world’s largest floating offshore facility.

The Prelude has been forecast to annually produce 5.3 million tons of liquids, 3.6 million tons of LNG, 1.3 million tons of condensate and 400,000 tons of LPG.

The first phase of Masela is expected to produce of 2.5 million tons of gas yearly.

Voser was speaking on the sidelines of the 2011 Singapore Energy Summit held from Monday to Friday. It was the fourth annual event organized by the Energy Market Authority, a statutory board under Singapore’s Ministry of Trade and Industry, in cooperation with Shell.

Before hundreds participants at the event, where about 15,000 institutions and corporations from 60 countries took part, Voser also said that Asia would be a key growth region over the long term, accounting for a huge part of Shell’s oil and gas investments as they expand.

“We see a lot of growth and hopefully enough growth that it can actually drive the worldwide economy,” he told the forum.

Voser also said that the prices of LNG in Asia were expected to continue rising and refining margins to stay under pressure in 2012. “LNG prices are rising and we see this continuing,” he said.

Shell’s LNG sales volumes increased 12 percent to 4.76 million tons from the same period the previous year, Bloomberg reported. Overall production fell 2 percent to 3.012 million barrels of oil equivalent a day. New fields contributed about 270,000 barrels of oil equivalent per day.

Another speaker of the event, Nobuo Tanaka, former executive director of the International Energy Agency (IEA), stressed that there was a need for a new framework on energy security, particularly given the uncertain global economic outlook and heightened price volatility.