Shell and Chevron’s agreements to sell stakes in major Indonesian gas projects to Pertamina, Petronas and Eni will unleash development at the fields, enabling the country to boost its flagging output, the buyers said.
Indonesia has seen declining oil and gas production in recent years due to depleting reserves, and as major new projects face delays due to oil majors’ exits.
After signing a deal on Tuesday to buy a 20% stake in the Masela gas block from Shell, Nicke Widyawati, CEO of Indonesian state energy firm Pertamina, told reporters at the Indonesia Petroleum Association conference that a final investment decision on the project would be made in 2026.
Shell had been looking to sell its 35% interest in the project since 2019. Under the agreement signed on Tuesday, Malaysia’s Petronas will buy Shell’s other 15% stake.
“Our participation underscores the commitment in supporting Indonesia’s production target to achieve one million barrels of oil per day and 12 billion standard cubic feet per day of gas by 2030,” Petronas group CEO Tan Sri Tengku Muhammad Taufik said.
Abadi LNG, led by Japan’s Inpex Corp, will use gas from the Masela block to produce 9.5 million metric tons per year of LNG at its peak, which will be shipped from the proposed terminal for domestic industries and overseas customers.
Dwi Soetjipto, the CEO of Indonesian upstream regulator SKK Migas, told Reuters at the same conference that an FID on the project could be reached as early as end-2024.
FAST TRACK
Eni also signed a deal on Tuesday to take over Chevron’s stake in the IDD gas project. It said the acquisition will allow it to fast-track development of the resource, in which it was already a partner along with Pertamina and China’s Sinopec.
The IDD project involves the Bangka, Gendalo and Gehem gas fields, and its development will integrate the nearby Jangkrik and North Ganal blocks operated by Eni in the Kutai basin.
It will also leverage the Jangkrik infrastructure and the existing Bontang LNG facility, in which Eni holds a stake, Eni said. Chevron confirmed the sale and said it continues to invest in Indonesia.
SKK Migas also said on Tuesday that three to five potential investors from the Middle East and Asia have started assessing the Tuna natural gas project in a possible sale of Russian firm Zarubezhneft’s stake.
British firm Harbour Energy is currently partnering with Zarubezhneft on the gas field, but Zarubezhneft plans to pull out of the project due to a lack of progress following sanctions on Russian companies.
The Tuna field is expected to reach peak production of 115 million standard cubic feet per day in 2027. Gas from the field will be exported to Vietnam from 2026.
Indonesia still has “huge potential” from natural gas resources, its Energy Minister Arifin Tasrif told the conference earlier, and would exploit gas as a bridge fuel in its transition to greener forms of energy.
Big producers have in recent years promoted gas, which has lower emissions than coal when burned, as a transition fuel to smooth out intermittent supply from renewables. The move has been fiercely resisted by environmentalists.
(Reporting by Fransiska Nangoy, Bernadette Christina Munthe; Writing by Florence Tan and Emily Chow; Editing by Muralikumar Anantharaman, Christian Schmollinger and Kim Coghill)