Energy Minister Expressed Discontent over Shell's Slow Exit from Masela Block
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26 May 2023 23:50 WIB
TEMPO.CO, Jakarta - Indonesian Minister of Energy and Mineral Resources Arifin Tasrif expressed his disappointment about the slow progress of Shell to exit the management in the Masela oil and gas block.
To date, the British oil and gas company does not want to release its participating interest in the Masela Block in Maluku when it had announced the plan of withdrawal in 2020.
“Shell already exits [the management] but acts irresponsibly,” Arifin said at the ministry office, Friday, May 26, 2023.
Arifin asserted that Indonesia is hampered by Shell’s exit delay because if the mining project runs, it will produce gas of 1,600 million standard cubic feet per day (MMSCFD), or 9.5 million tonnes of LNG per year (mtpa) and 150 MMSCFD pipeline gas, and 35,000 barrels of oil per day.
The Masela Block is being worked on by a Japanese company Inpex Corporation as the operator with a 65 percent stake and the remaining 35 percent is held by Shell Upstream Overseas Services.
Arifin thus questioned Shell's decision. “If they don't want to [work on the block], that's okay [to exit],” he said.
If there is no activity in the Masela Block by 2024, the government will take over the Abadi liquified natural gas (LNG) project based on the Plan of Development (PoD) for the Masela Block.
“If nothing is executed after 5 years, we will review it again. It's now been 4 years (from) 2019 to 2023, so we remind this,” Arifin emphasized.
The Masela Block is located in the vicinity of the Aru Sea and has been explored since 1998. This project requires a very large capital expenditure estimated to reach US$20 billion. Thus, it will be difficult if it is developed by a single investor.
Coordinating Minister for Maritime Affairs and Investment Luhut Binsar Pandjaitan stated that state-owned oil and gas giant Pertamina had agreed to form a consortium to run the project to replace Shell.
ADE RIDWAN YANDWIPUTRA
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