Mubadala deepens Indonesia gas push

Mubadala Energy has secured the Southwest Andaman exploration Production Sharing Contract in Indonesia, giving the Abu Dhabi-based company full control of a new offshore block that strengthens its growing position in one of Southeast Asia’s most closely watched gas frontiers. The contract was awarded under Indonesia’s Gross Split regime, under which the contractor bears all operating and capital costs, and the company will hold a 100 per cent participating interest as operator.

The acreage sits next to Mubadala Energy’s existing Andaman portfolio, adding to its interests in South Andaman, Andaman II and Central Andaman. That proximity matters. It allows the company to build on geological knowledge gathered over the past several years and raises the prospect of sharing data, development planning and, in time, infrastructure options across a broader cluster of offshore gas assets. Mubadala has described the block as a natural extension of its established Andaman position, while Indonesia’s upstream authorities included Southwest Andaman among the winners announced from the later stages of the country’s 2025 bid rounds.

The award marks another step in Mubadala Energy’s attempt to turn Indonesia into a central pillar of its gas-led growth strategy. The company has spent the past few years building momentum in the Andaman basin, a deepwater area off northern Sumatra that has drawn fresh attention after a run of sizeable discoveries. Its South Andaman campaign produced the Layaran-1 discovery in December 2023, which the company said held potential gas in place of more than 6 trillion cubic feet. That was followed in May 2024 by the Tangkulo-1 discovery, which Mubadala said added more than 2 trillion cubic feet of gas in place.

Those finds elevated Mubadala’s standing in Indonesia at a time when Jakarta is pressing for more upstream investment to shore up future domestic supply and sustain its role in regional gas markets. Reuters reported in May 2025 that Mubadala expected production from Tangkulo-1 in the South Andaman block to begin in late 2028, subject to pricing and development progress. The same report said the company had signed an initial agreement to supply gas to state fertiliser producer Pupuk Indonesia, underlining how closely the commercial case for new offshore gas is tied to domestic demand, regulated prices and the state’s industrial policy.

For Indonesia, the contract award also reflects a broader policy effort to keep investor interest alive in frontier acreage. The Ministry of Energy and Mineral Resources said on 17 March 2026 that nine working areas from the second and third stages of the 2025 direct offer process had been awarded, with total committed investment of $84.75 million and signature bonuses of $3.65 million. For Southwest Andaman, the ministry listed Mubadala Petroleum Limited as the winning bidder, with first-three-year commitments including geological and geophysical work and 3D seismic acquisition, for a total commitment of $8.2 million plus a $300,000 signature bonus.

The Gross Split framework is significant because it places greater execution risk on the contractor than Indonesia’s older cost-recovery model. Under this system, companies do not reclaim spending from the state in the traditional way and must instead make projects work through agreed production shares, incentives and commercial discipline. Legal and industry analyses published in 2025 and 2026 show that Gross Split contracts remain a key part of Indonesia’s effort to simplify approvals and make frontier exploration more attractive, even as investors continue to weigh fiscal terms, geology, infrastructure and gas pricing.

Mubadala’s advantage is that it is not approaching Southwest Andaman as an isolated wildcat. The company has spent years assembling position, subsurface knowledge and government relationships in the basin. Its own account of the block said the opportunity was first identified in 2022, followed by a Joint Study Agreement in 2023 and completion of that study in November 2024 before a formal bid was lodged in November 2025. That chronology suggests a deliberate basin-building strategy rather than a one-off acreage grab.

The wider Andaman story has been gathering pace since earlier discoveries by other operators helped validate the basin’s promise. Indonesia’s energy officials have for several years pointed to the waters off Aceh as a potentially major gas province, while market watchers have increasingly treated the area as one of the few frontier zones in the region capable of delivering material new volumes. Mubadala’s latest contract does not guarantee another large find, but it expands the company’s room to test a play it already understands and gives it more control over how a future hub could be shaped.