The investment would be disbursed gradually, with the first phase, expected to begin in 2013, to require $15 billion in capital spending, Coordinating Economic Minister Hatta Rajasa said.
Shell holds a 30 percent stake in the Masela block, while 10 percent is controlled by PT EMP Energi Indonesia, and Inpex, the block operator, holds majority ownership with 60 percent.
“Shell has also been committed to expanding the capacity of the planned floating LNG [liquefied natural gas] plant at Masela block from 2.5 million tons to 6 million tons,” Hatta told reporters after meeting Shell chief executive officer Peter Voser with President Susilo Bambang Yudhoyono at the Presidential Palace in Jakarta.
Hatta said that Yudhoyono asked Shell and Inpex to allocate most of the gas from the block for domestic use, so the fuel would aid Indonesian economic growth and not simply provide revenue.
According to upstream oil and gas authority BPMigas estimates, the Masela block has a total gas reserve of 6.05 trillion cubic feet. The block’s development is expected to be completed between 2018 and 2019.
BPMigas said the investment needed to exploit current reserves was between $9 billion and $10 billion, although the figure would be much higher if Shell and Inpex proceeded with further exploration.
Energy and Mineral Resources Minister Jero Wacik, who also attended the meeting, said that Shell asked the government to accelerate its approval of the block’s plan of development (POD).