Tangerang. Shell agreed on Tuesday to sell its 35 percent stake in the Production Sharing Contract (PSC) of the Masela gas block to Pertamina and Petronas for up to $650 million.

The deal involves state-run oil company Pertamina, through its subsidiary Pertamina Hulu Energi, acquiring a 20 percent stake, and its Malaysian counterpart Petronas, through its subsidiary Petronas Masela, obtaining a 15 percent stake in the Masela block.

Shell said it has agreed to sell its participating interest of 35 percent in Masela to be paid “$325 million in cash with an additional contingent amount of $325 million to be paid when the final investment decision (FID) is taken on the Abadi gas project”.

“The decision to sell our participation in the Masela PSC [Production Sharing Contract] is in line with our focus on disciplined capital allocation,” Zoë Yujnovich, Shell’s Integrated Gas and Upstream Director, said in a statement. 

“We wish to thank all stakeholders, especially the Government of Indonesia for their support throughout the sales process. Shell remains active in Indonesia and continues to contribute to the country’s energy transition journey.”

Pertamina CEO Nicke Widyawati said.the agreement allows the company to expand the LNG business by acquiring the Abadi gas field in Masela Block.

She expressed confidence that Pertamina Hulu Energi, which focuses on upstream business development, is capable of building mutually beneficial partnerships with its global partners.

According to Nicke, the Masela Block has the potential to provide up to 10,000 jobs in the country’s eastern region. 

The tripartite sale and purchase agreement was signed by Pertamina Hulu CEO Wiko Migantoro, Petronas Upstream Business CEO Adif Zulkifli, and Shell’s Director Finance for Acquisition, Divestment and New Business Development Asia Pacific Kuo Tong Soo on the sidelines of the Indonesian Petroleum Association convention in Tangerang. 

Japanese exploration firm INPEX Corporation currently holds a 65 percent operating interest in Masela PSC and is the operator of the Abadi gas project in the Masela Block, 150 kilometers offshore Saumlaki in Maluku province.

Shell acquired an interest in the Masela PSC in 2011.