Petronas to replace Shell in Masela Block is positive news: observers

Jakarta – The news that a Malaysian company will replace Shell in the Masela Block is considered positive by observers. Petroliam Nasional Berhad (Petronas), a Malaysian oil and gas company is rumoured to be taking over the management of the participating interest (PI) from Shell, which released its participation rights in Abadi Field, Masela.

Petronas representatives have met directly with the management of Pertamina Hulu Energi (PHE), the Upstream Subholding of PT Pertamina (Persero). Even so, neither Pertamina nor the government wanted to talk much, and emphasised that Petronas’ involvement was a business to business initiative.

Oil and gas practitioner Hadi Ismoyo believes that the potential involvement of Petronas in the management of the Masela Block is quite positive. “If Petronas does join, then it is a positive step. Sharing risks in managing an oil and gas block of Masela’s calibre is the right step,” said the former Secretary General of the Indonesian Petroleum Engineering Alumni Association (IATMI).

According to him, Petronas is one of the companies that has the ability to develop and manage LNG at sea on a small scale. Even the Floating LNG (FLNG) in Sarawak waters managed by Petronas is the first FLNG in the world. The small Floating LNG has a capacity of around 1.2 MTPA.

“This means that operationally, Petronas’ experience in handling FLNG is very important, to anticipate if in the end Masela Development returns to the Floating LNG option like the original Plan of Development or POD,” Hadi explained.

Currently, the POD requested by the government is for onshore processing of LNG. The government is considering the option of phased, small-scale management of the Masela Block. This is so that the Masela project can continue and Indonesia does not lose the momentum of gas utilisation that will intensify in the next few years.

In the initial POD, the investment value in the Masela Block is estimated at USD 19.8 billion, with the capacity of the LNG facility reaching 9.5 Metric Tons Per Annum (MTPA) or equivalent to 1,600 million cubic feet per day (MMscfd) and pipeline gas reaching 150 MMscfd. In addition, Masela Block is projected to produce 35 thousand barrels of condensate per day. The amount of investment is rumoured to swell between USD 1.3 – 1.4 billion to finance the implementation of Carbon Capture Utilisation and Storage (CCUS).

The Masela Block is one of the National Strategic Projects (PSN) whose participation rights are held by Inpex and Shell. However, Shell later expressed a desire to relinquish its participation rights in Abadi Field. Prior to its withdrawal from the Masela Block, Shell held 35% of the participating interest (PI), while Inpex held the remaining 65%. (Hartatik)

Banner photo: PT Pertamina Hulu Energi (PHE) exploration well in North Java waters. (Source: Pertamina)

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