Shell Offloads Another SE Asian Asset with Masela Sale

Shell PLC has completed the sale of Indonesia’s Masela block for $650 million, in another divestment of Southeast Asian assets that it said is part of its focus on “disciplined capital allocation”.

Indonesia’s PT Pertamina Hulu Energi and Malaysia’s Petronas Masela Sendirian Berhad now own the British energy giant’s 35 percent stake in the production sharing contract (PSC) in the offshore block. The sale comes amid the delay of the Abadi gas project in the block operated by Inpex Corp. with a 65 percent interest.

Shell was part of the PSC through Shell Upstream Overseas Services Ltd. (SUOS). Pertamina now holds 20 percent of the Shell interest while Petronas has the remaining 15 percent.

“Completion of the sale follows regulatory approval from Indonesia’s Ministry of Energy and Mineral Resources for the transfer of SUOS’ stake to PT Pertamina Hulu Energi Masela and Petronas Masela”, Shell said in a recent press release.

The transaction consisted of $325 million in cash and a contingent $325 million to be paid upon the reaching of a final investment decision (FID) for Abadi.

The delayed Abadi gas project, expected to reach an FID in the latter half of this decade and start production in the 2030s, is planned to produce about 9.5 million metric tons of liquefied natural gas a year and around 35,000 of condensate per day, according to information on the website of Japan’s Inpex.

Discovered 2000, Abadi has faced delays due to changes in the development plan and Indonesian policy. In the latest revision, Inpex announced April 4, 2023 it had submitted a revised plan to include a carbon capture and storage component. The addition was to comply with the Jokowi administration’s Ministerial Regulation of Energy and Mineral Resources on Carbon Capture, Utilization and Storage, requiring upstream oil and gas operators to capture their own emissions.

“This divestment is in line with Shell’s focus on disciplined capital allocation”, Shell said in the press release announcing the completion of the Masela sale.

“Shell remains active in Indonesia’s downstream and low-carbon fuel sectors”.

Earlier Shell announced the completion of the divestment of non-operated interests in neighboring Malaysia’s Baram Delta, which it said allows it to focus resources on its upstream portfolio.

This transaction saw Shell give up two offshore PSCs in which it had held 50 percent and 40 percent interests to Petroleum Sarawak Exploration & Production Sdn. Bhd. 

“This divestment is in line with Shell’s work to focus its Upstream portfolio”, Shell said in a press release March 15, 2023.

“Shell retains a strong presence in Malaysia’s upstream, gas-to-liquids, downstream and business services sectors”.

In August Shell announced the delivery of the first gas from its Timi field platform in Malaysia, designed to produce up to 50,000 barrels of oil equivalent per day.

“Timi features Shell’s first wellhead platform in Malaysia that is powered by a solar and wind hybrid power system”, it said in a press release August 28 announcing the startup.

Shell discovered Timi, a sweet gas field, in 2018 under the SK318 contract with Petronas Carigali Sdn. Bhd., a subsidiary of Malaysia’s state-owned Petroliam Nasional Bhd. (Petronas), and Brunei Energy Exploration. Timi sits about 126 miles northwest of Miri, Sarawak and 157 miles northwest of Bintulu in the same state, according to Shell.