Bahlil Considers Aceh's Request for Andaman Gas Processing at Arun SEZ
Energy and Mineral Resources Minister Bahlil Lahadalia has stated that the Aceh government’s request to process gas from the Andaman Block at the Arun Special Economic Zone (KEK) in Lhokseumawe is still under consideration from an economic standpoint. “I cannot decide yet because it is still under discussion. We have to find a win-win solution regarding Aceh’s request. We cannot just say yes if the cost is high,” Bahlil said in Banda Aceh on Saturday. He made the statement during a press conference following the inauguration of the Golkar Party’s Aceh Regional Leadership Council.
The minister explained that gas management is fundamentally a business matter. This means that as long as the economic calculations are viable, Aceh’s request for processing at KEK Arun can be considered. However, if the economic calculations are too burdensome, it might be difficult to force the issue. “Because no business will end up at a loss. Everything must be profitable. Profitable for the people of Aceh in terms of revenue, profitable for the investor. And we can share that revenue,” he said.
Mubadala Energy has discovered gas reserves in the offshore Andaman Block, with an initial production target of around 300 million standard cubic feet per day (MMSCFD). Following this discovery, Aceh Governor Muzakir Manaf, also known as Mualem, wrote to President Prabowo Subianto and the Energy Minister regarding the management of the oil and gas find at the Tangkulo South Andaman field. The governor also requested that the allocation of Mubadala’s gas be used for local industry in Aceh and asked for a temporary postponement of the Plan of Development (PoD).
Bahlil noted that the gas discovery by Mubadala is located more than 12 nautical miles offshore. Consequently, building a gas pipeline would require significant investment, ultimately making the gas price reach up to US$10 per MMBTU. “If we build the pipeline, the cost is indeed high. And it will not produce a competitive gas selling price. It could reach above US$10 per MMBTU,” he stated.
Bahlil said that a portion of the planned production is slated for distribution to the state electricity company PLN and to local industry in Aceh, specifically Pupuk Iskandar Muda (PIM). “Currently, Pupuk Iskandar Muda’s raw materials partly use LNG, which we bring in from Papua, Sulawesi, and Kalimantan. We will push for a portion of this to be sourced from the Andaman Block,” he said. He emphasised that the concession holder for the Andaman block is Mubadala Energy, and the government must ensure the project’s sustainability and its impact on the welfare of the Acehnese people. “That is the most important thing. And there is also a production sharing scheme involved,” Bahlil concluded.