TEMPO.CO, Jakarta - Energy and Mineral Resources Minister Bahlil Lahadalia stated that the government has yet to decide on the gas processing scheme for the Andaman Block, as it is still weighing the economic viability. Previously, the Aceh regional government pushed for the gas to be processed onshore within the Arun Lhokseumawe Special Economic Zone (SEZ).
"I cannot make a decision yet because it is still under discussion. We need to find a win-win solution [regarding Aceh's demand]. We cannot say yes if the cost is too high," Bahlil Lahadalia said in Banda Aceh on Saturday, July 11, 2026, as quoted by Antara.
Bahlil conveyed this to the media during a press conference following the inauguration of the executives of the Aceh Golkar Party's Regional Leadership Board I in Banda Aceh.
Bahlil emphasized that the management of this gas ultimately boils down to business. This means that if the economic calculations prove viable, then the Aceh administration's demand for gas processing in the Arun SEZ can be accommodated.
Conversely, Bahlil noted that if the financial projections prove challenging, the onshore gas processing scheme may be difficult to implement.
"Because no business is meant to end in a loss. Everything has to be profitable—profitable for the people of Aceh in terms of their revenue, and profitable for the investors. And we can all share in that revenue," Bahlil said.
It was previously reported that Mubadala Energy had discovered offshore gas reserves in the Andaman Block. In its initial phase, Mubadala Energy's production is targeted to reach 300 million standard cubic feet per day (MMSCFD).
Following this gas discovery, Aceh Governor Muzakir Manaf, popularly known as Mualem, wrote to President Prabowo Subianto and the Minister of Energy and Mineral Resources regarding the management of the oil and gas findings in the Tangkulo South Andaman Field by Mubadala Energy.
The Aceh regional government requested that the gas be managed using an onshore receiving facility (ORF) scheme on land, specifically within the Arun Lhokseumawe SEZ. This means avoiding the use of a Floating Production, Storage, and Offloading (FPSO) scheme or offshore processing.
Furthermore, the Aceh administration requested that a portion of the Mubadala gas be allocated to fuel local industries in Aceh. Additionally, the regional government requested a temporary postponement of the Plan of Development (PoD) or its planning documents.
Bahlil explained that Mubadala's gas discoveries are located more than 12 nautical miles offshore. Constructing an undersea gas pipeline would require a substantial capital investment. Consequently, the gas price could soar above $10 per MMBTU, making it uncompetitive in the market.
"If we build the pipeline, the cost is indeed high, and that will not yield a competitive selling price. It could reach above $10 per MMBTU," he said. The initial production target for Mubadala's gas is slated to be around 300 MMSCFD.
Part of this production output, he noted, is earmarked for distribution to state utility firm PLN and local industries in Aceh, specifically fertilizer manufacturer Pupuk Iskandar Muda (PIM). "Because Pupuk Iskandar Muda currently relies on LNG as part of its raw materials, which we source from Papua, Sulawesi, and Kalimantan. Now, we will encourage a portion of this to be drawn from the Andaman Block," he said.
Furthermore, Bahlil stated that the concession holder of the Andaman Block is Mubadala Energy. Therefore, the government must ensure both the project's long-term sustainability and its positive impact on the welfare of the Acehnese people. "That is the most important thing, and there is also profit-sharing involved," he said.
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