Royal Dutch Shell PLC, which has been absent from Indonesia for many years, is now considering new investments in the country's upstream and downstream sectors, according to Chief Executive Officer Peter Voser.
"We have been in talks with state oil company Pertamina and the government, offering them our technology and experiences to develop energy projects such as floating LNG plant," Voser told The Jakarta Post.
Voser's remark reiterated reports in January 2009 that Shell is considering taking part in a project of Inpex Corp. to construct a floating LNG (FLNG) plant in Indonesia.
Inpex, currently the sole operator of the Abadi gas field in the Masela block in eastern Indonesia, plans to build an LNG train with capacity of 4.5 million tonnes/year and to start LNG production from 2016.
Indonesia's role
Meanwhile, Voser acknowledged Shell has long been absent from Indonesia but insisted "we have come back and we are the first oil major to enter the downstream market with our strong retail brand."
Asia is a key for the future growth of Shell's downstream market, Voser said, adding that Indonesia, with the third-largest population in Asia, will play an important role in the firm's investment portfolio.
Although Shell plans to sell up to 9,000 retail outlets in mature markets as part of a continued cost-cutting program, the firm will further expand its retail network in Indonesia.
Voser did not detail Shell's upstream interests in Indonesia, but another company official last year said the firm is aiming at a 30-60% stake in the Natuna D Alpha block.
At the time, President Director and Country Chairman of PT Shell Indonesia Darwin Silalahi said Shell was not satisfied to be a junior partner with Pertamina and to hold only a 15% interest in the project.
Darwin said Shell wanted to become a senior partner so it could apply its technology to the Natuna D Alpha project as well as to transfer new technology to Pertamina.
"We will be able to play a more significant role if we control an interest of 30-60% like we do in other deep-sea oil and gas projects in various countries," Darwin said.
Shell is among eight candidates shortlisted by Pertamina to develop the Natuna D-Alpha block, which has an estimated 46 tcf of gas, making it Asia's largest gas reserve.
Last April, the Indonesian government said it expected to find more oil and gas reserves as a result of a memorandum of understanding signed by Shell agreeing to return historical exploration documents to the country.
Evita H. Legowo, director general for oil and gas at the Energy and Mineral Resources Ministry, said she had signed the MOU with Shell in The Hague on Apr. 22, 2009.
"Under the MOU, Shell agreed to return all its exploration documents before 1965," Evita said. She added Shell committed to provide around $500,000 to cover the scanning, processing, and delivery of the documents.
"We expect the data transfer will be completed in no more than 1½ years," she said.
Evita said the documentation is expected to provide more information about oil and gas potential in Indonesia. "It is possible that, based on the data, we will find new oil and gas blocks," she said.
Asked whether Shell expected any trade-off from its return of the data, Evita said so far the agreement did not specify anything.
Shell began its business activities in Indonesia more than 100 years ago, but with the nationalization policy following independence the company sold all its Indonesian assets to Pertamina in 1965.
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