Shell has been warned that its stake in the Masela block will be reclaimed by the Indonesian government if the company fails to offload it by next year, reported Reuters citing a senior government official.

The official also confirmed that Malaysia’s state-run Petronas was a potential buyer of the stake in the Masela project.

Currently, Japanese energy company Inpex operates the Masela project, also known as the Abadi LNG project, with 65% stake while Shell owns 35% interest.

Shell has been looking to divest its stake in the project since 2019.

The National Energy Council, which formulates policies with the energy ministry and upstream regulator SKK Migas, secretary general Djoko Siswanto was cited by the news agency as saying that Shell has been too slow to decide on its stake sale in the project despite been given enough time by the government.

Siswanto was cited by Reuters as saying to CNBC Indonesia TV: “We could terminate (the stake) and Shell won’t get anything. So they must be quick to make a decision.”

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Indonesia is considering advancing the Masela project to boost domestic production of natural gas.

In April 2023, Inpex submitted a revised development plan for the Abadi LNG project, incorporating a carbon capture and storage (CCS) component, to the Indonesian government authorities.

With annual production capacity of 9.5 million tonnes, the Abadi LNG project is expected to contribute to enhancing energy security in Indonesia, Japan, and other Asian countries.