Indonesia may Form Consortium to Take Shell Stake in Masela Gas Project

OIL AND GAS - JAKARTA. Indonesia may form a consortium to take over a 35% stake in the Masela gas project held by Shell after the company signaled its intention to withdraw, the investment minister said on Thursday.

Bahlil Lahadalia told parliament Shell wanted to divest from the $20 billion project, so a consortium of state-owned energy firm Pertamina, the Indonesia Investment Authority (INA) sovereign wealth fund and other companies could take its share.

"The president has ordered me and the state-owned enterprises minister to prioritise the Masela gas project," he told lawmakers.

Japanese energy company Inpex corp controls 65% of the project, also known as the Abadi LNG project, and hopes to make a final investment in Masela in the later half of this decade.

Bahlil also said the president believed Saumlaki town in the Tanimbar Islands was the right location for the project, as basic infrastructure was available.

Pertamina chief executive Nicke Widyawati told a separate parliament meeting on Thursday that the company had expressed its interest to participate in the Masela project to Inpex.

"The point is we are interested because this is a giant discovery which could increase gas reserves and production," Nicke told lawmakers.

She said Pertamina might soon launch due diligence but said that any decision regarding investment would depend on the commercial feasibility of the project.

The liquefied natural gas (LNG) plant, which will have a capacity of 9.5 million tonnes per year, is expected to start operations in 2027, according to its development plant approved in 2019.

A Shell spokesperson said the company could not comment on the project's portfolio activity at this time.

Inpex representatives in Jakarta and INA did not immediately respond to requests for comment.