Royal Dutch Shell Plc and its partners will invest $12 billion to develop natural gas projects in the offshore Masela block, Indonesia’s Coordinating Minister for the Economy Hatta Rajasa said Thursday.
The total investment could rise to $20 billion as they seek to boost production capacity of liquefied natural gas at the associated Abadi facility to 6 million metric tons annually, Mr. Rajasa said. He was speaking after a meeting with Shell Chief Executive Officer Peter Voser.
In an email, a Shell spokeswoman declined to comment on the figures.
The investment in the Masela block would be one of the largest ever in Indonesia by a foreign company and would likely boost Indonesia’s profile as it seeks to attract foreign capital to its oil and gas industry.
Shell owns a 30% stake in the Masela block, which is estimated to have roughly 300 million metric tons in natural gas reserves. It bought the stake in 2011 from Japan’s Inpex Corp., which now holds a 60% stake in the block. Indonesia’s PT Energy Mega Persada holds the remaining 10%.
Separately, Indonesian Energy Minister Jero Wacik said Thursday that he was optimistic that production at the block could begin by 2019.
Shell “asked for an accelerated plan of development, and I’ve already assembled a team from [upstream oil and gas regulator] BP Migas to do this,” Mr. Wacik said.
Development plans for the block include Indonesia’s first floating liquefied natural gas project, which would process gas from the block into LNG for export, primarily to Japan. Initial LNG output from Abadi has previously been forecast at 2.5 million tons a year.
Indonesia is currently the top natural gas producer in Asia, with annual output of 85 billion cubic meters. But the country has struggled to honor its contracts to ship LNG to offshore buyers as its domestic consumption of natural gas rises.
