Shell sells its stake in Indonesian LNG project

Royal Dutch Shell is selling its stake in Indonesia's USD $15 billion Abadi liquefied natural gas (LNG) project following an asset disposal program that has raised more than USD $30 billion. Shell is the world's largest buyer and seller of LNG. It is raising cash to help pay for its USD $54 billion purchase of BG Group in 2015 and hopes to raise around USD $1 billion from the sale of its 35 percent stake in the project.

Southeast Asia's largest economy faces difficulty in attracting energy investment; the Masela block of the Abadi project is operated by Japanese oil and gas firm Inpex, which holds the remaining stake. Construction was due to start in 2018, but in 2016 was delayed until at least 2020 after Indonesian authorities instructed a switch from an offshore to an onshore facility. The project is not expected to be operational until at least 2026, but Inpex has started preliminary front end engineering design for an LNG plant with an annual capacity of 9.5 million tonnes. Shell's annual report revealed that Inpex and Shell are now preparing a new Plan of Development for submission this year.

Shell sees LNG as a central pillar of the world's transition to lower carbon energy in the coming decades and its decision to sell out of Abadi follows the company’s exit from a major Baltics LNG project led by Russian state gas giant Gazprom. Last year, Shell decided to move ahead on development of a USD $31 billion LNG export terminal in Western Canada, known as LNG Canada.