Mubadala deepens Indonesia gas foothold

Mubadala Energy has tightened its grip on one of Southeast Asia’s most closely watched offshore gas provinces after winning the Southwest Andaman exploration Production Sharing Contract in Indonesia, a move that extends the Abu Dhabi-based company’s push to build scale in the country’s Andaman basin. The block was awarded by Indonesia’s oil and gas regulator, Direktorat Jenderal Minyak dan Gas Bumi, under the second bid round for 2025. Mubadala Energy will hold a 100 per cent participating interest and act as operator under the gross split scheme.

The award gives the company another strategic position beside acreage it already controls or participates in across the Andaman area, where it has spent the past few years assembling a gas-led portfolio. Mubadala says its Andaman holdings now span South Andaman, Central Andaman, Andaman I, Andaman II and Southwest Andaman, reinforcing its standing as one of the basin’s largest and most active explorers. The company has described the new block as a natural extension of the geological play that supported its earlier drilling success.

That success matters because the company is no longer pursuing Indonesia as a frontier experiment. It has already turned the basin into a central pillar of its growth strategy after discoveries at Layaran-1 in 2023 and Tangkulo-1 in 2024 in the South Andaman block. Mubadala said Layaran-1 held more than 6 trillion cubic feet of gas in place, while Tangkulo-1 added more than 2 trillion cubic feet of gas in place. Those finds helped transform the Andaman offshore from a promising concept into a more commercially credible gas province.

The company’s own timetable underlines how quickly the basin has moved up its priority list. Reuters reported in May 2025 that Mubadala expected gas production from Tangkulo-1 in South Andaman to begin in late 2028, tied to negotiations over domestic pricing and offtake. Mubadala’s latest statement on the Southwest Andaman award says progress in South Andaman remains aimed at first gas before the end of 2028, suggesting the new acreage is being added while development planning on existing discoveries continues in parallel.

For Indonesia, the contract also fits a broader policy effort to attract exploration capital while pressing investors to shoulder more of the early-stage spending burden. Under the gross split model, contractors bear all operational and capital expenditure and do not recover costs in the traditional way. Instead, they receive a share of gross production determined by a base split that can then be adjusted according to factors such as field characteristics, infrastructure and commodity prices. Legal and industry analyses say the framework is meant to simplify administration and sharpen efficiency, though it also places greater commercial risk on operators.

That risk-reward balance helps explain why the Southwest Andaman award is more than a routine acreage addition. A 100 per cent operated interest gives Mubadala full control over exploration pace, seismic interpretation and future drilling decisions, but it also leaves the company carrying the full cost of the work programme at this stage. Mubadala has signalled that the first exploration well on the block is expected only in the second exploration phase, between years four and six, after new 3D seismic data are acquired and fully interpreted. That points to a measured, data-heavy approach rather than a rush to drill.

Company executives have framed the block as a logical next step in building a dominant gas position in the basin. Chief executive Mansoor Mohamed Al Hamed said the award builds on the company’s multi-trillion-cubic-foot discoveries at Layaran, Tangkulo and Timpan, while Indonesia country head Abdulla Bu Ali said the decision reflected Jakarta’s trust in Mubadala as a long-term partner. Those remarks are consistent with the company’s broader profile: Mubadala Energy says gas accounts for 69 per cent of its portfolio, underlining why Indonesia’s offshore gas prospects have become increasingly important to its international mix.

The commercial backdrop remains complex. Indonesia wants more domestic gas supply for industry and power, yet price caps at home can compress returns for upstream investors. Reuters reported last year that capped domestic prices for selected sectors sat well below spot LNG values in Asia, leaving developers to weigh state supply priorities against export economics and project viability. That tension is likely to shape how any large Andaman discoveries are commercialised, including whether volumes are directed into domestic contracts, LNG-linked structures or a blend of both.