Analysts have pointed to the nearly decade-long delay in completing the project and a divestment trend among oil and gas companies, while the government says that Shell Indonesia has denied the report.
Reuters report on Royal Dutch Shell’s plans to withdraw from the development of the gas-rich Masela Block should be a wake-up call to the government to accelerate its completion of the project, which has been delayed by nearly a decade, an analyst says.
Researcher Pri Agung Rakhmanto of Jakarta-based research group ReforMiner Institute said the government should take the report as a warning, that it would lose a big investor in the country’s oil and gas sector if it was not serious about resolving uncertainties in the project.
“It’s a warning for government that if clarity and certainty is not provided soon on the project investment, which is actually in our sights, it will be back to zero,” he told The Jakarta Post on Monday.
A series of policy changes in the past few years, such as a change from an off-shore to an on-shore facility, have affected projections for investment and the on-stream schedule to cause a delay of at least nine years from the initial time frame set for 2018.
Pri explained that a company as large as Shell must be realistic and rational when investing in any oil and gas project.
“As a multinational company, Shell must seek a more profitable project and one that offers investment certainty, such as [investing in] US shale oil and gas,” he said.
Reuters reported on May 3 that Shell planned to sell its 35 percent stake in the US$15 billion LNG (liquefied natural gas) project in the Masela Block's Abadi field. The company expects to raise about $1 billion from selling its interest in the project to help finance its $54 billion purchase in 2015 of the British energy firm, BG Group.
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