Shell subsidiary sells stake in Indonesia’s Masela PSC for $325m

Shell Upstream Overseas Services (I) Limited (SUOS), an affiliate of Shell plc, has finalized its divestment of a 35% interest in Indonesia’s Masela Production Sharing Contract (Masela PSC) for a base consideration of $325 million in cash. This deal, which also encompasses the Abadi gas project, comes after attaining the necessary regulatory approval from Indonesia’s Ministry of Energy and Mineral Resources. The buyers in this transaction are PT Pertamina Hulu Energi Masela and Petronas Masela Sdn. Bhd (Petronas Masela).

Aligning with Shell’s Strategic Focus

Shell’s decision to divest from the Masela PSC aligns with its broader strategy of disciplined capital allocation. While this represents a significant shift, Shell persists in its commitment to Indonesia’s downstream and sustainable fuel sectors.

An Insight into Masela PSC and Abadi Gas Project

The Masela PSC, with INPEX Corporation holding a 65% operating interest, oversees the Abadi gas project. Positioned in the Masela block, this project is approximately 150 kilometers off Saumlaki in Indonesia’s Maluku province. SUOS had first invested in the Masela PSC back in 2011.

Shell’s continued dedication to Indonesia is evident in its active management of downstream ventures encompassing mobility, lubricants, and marine businesses. As of September 30, 2023, Shell’s Mobility business oversees over 200 fuel stations across Indonesia. Additionally, in November 2022, Shell Indonesia amplified its Lubricant Oil Blending Plant, doubling its output to a staggering 300 million liters of lubricant products annually.

Backdrop of the Deal

The announcement for this deal first echoed in July 2023. Apart from the initial $325 million cash payout, an added contingent amount of $325 million will be dispensed once the final investment decision gets greenlit for the Abadi gas project. Targeted for completion in Q3 2023, the deal’s fruition awaited specific conditions, chief among them being the approval from Indonesia’s Ministry of Energy and Mineral Resources.