Shell to Re-enter Indonesian Oil and Gas Sector with Multiple Projects

Background of Shell's Return

Royal Dutch Shell is planning to make a comeback in Indonesia's oil and gas (migas) sector through new exploration and production projects. According to Djoko Siswanto, Head of SKK Migas, Shell has already conducted a joint study with Kuwait Foreign Petroleum Exploration Company (Kufpec) on a 50:50 basis. The company has submitted proposals for five new work areas to the Directorate General of Oil and Gas (Ditjen Migas), with two located offshore and three onshore.

Evaluation Process

The Indonesian Ministry of Energy and Mineral Resources (Kementerian ESDM) is currently evaluating the proposals submitted by Shell. While the specific locations of the proposed work areas were not disclosed, Djoko Siswanto confirmed that the evaluation is ongoing. The return of Shell to Indonesia's oil and gas sector is seen as a significant development, given the company's previous presence and subsequent exit from the country's upstream oil and gas industry.

Previous Exit and Current Plans

Shell had previously divested its stake in the Masela Block, a significant offshore gas field, in 2023. The company sold its 35% participating interest to PT Pertamina (Persero) and Petronas. Pertamina acquired a 20% stake through its subsidiary PT Pertamina Hulu Energi, while Petronas Masela Sdn Bhd took a 15% stake. The current proposals indicate Shell's renewed interest in Indonesia's oil and gas sector, potentially signaling confidence in the country's investment climate and energy potential.

Implications for Indonesia's Energy Sector

The potential return of Shell to Indonesia's oil and gas sector could have several implications. It may bring additional investment in exploration and production activities, potentially leading to increased domestic energy production. The involvement of a major international oil company like Shell could also bring advanced technology and expertise to the sector. However, the projects will need to comply with Indonesia's evolving energy policies and environmental regulations.