ITB Professor: Andaman gas benefits hinge on Aceh industrialisation

A professor from the Bandung Institute of Technology (ITB) has stated that the economic benefits of the gas discoveries in South Andaman will only materialise if industrialisation takes place in Aceh, necessitating the creation of new industries in Indonesia’s westernmost province. “Downstreaming is indeed Indonesia’s future. If raw materials like gas are processed into industrial products, the economic benefits will be far greater and more sustainable,” said Prof Tutuka Ariadji in a statement received in Banda Aceh on Monday. He conveyed that the South Andaman gas reserve discovery opens significant opportunities for Aceh to become a new centre of economic growth in Indonesia. However, the success of developing this area should not be measured solely by the size of the gas reserves or the volume of production achieved, but rather by how the gas can spur the birth of new industries that create added value, jobs, and sustainable economic growth. According to him, the South Andaman area is one of Indonesia’s most prospective exploration regions. Recent discoveries indicate that the area holds massive gas resources and has the potential to be a crucial pillar in achieving the national gas production target. “The discoveries in this area will contribute significantly to the national gas production target. Moreover, its location is strategic because the gas can be utilised for various needs, both domestic and export,” he said. The former Director General of Oil and Gas at the Ministry of Energy and Mineral Resources explained that Indonesia is targeting gas production of around 12 billion standard cubic feet per day (BSCFD) by 2030. Additional production from the South Andaman block is a key factor in maintaining national energy security while meeting the ever-increasing demand for gas. However, he stressed that the discussion on South Andaman should not stop at the size of the reserves or the choice of field development technology. Public attention should now shift to how these resources can provide maximum economic benefits for the people of Aceh. “What we need to think about now is not just how the gas is produced, but what the gas will be used for. That is where the economic benefits will be created,” he said. Tutuka assessed that natural gas has strategic value not only as an energy source but also as an industrial feedstock. Utilising gas as a feedstock will generate far greater added value compared to simply producing and selling it as a commodity. He added that gas-based industries can create new investments, expand employment opportunities, increase logistics activity, construction services, and trade, and encourage the growth of supporting businesses around the industrial area. “If gas is only sold as a commodity, there are certainly benefits. But if gas is used as industrial feedstock, the added value is much greater because it creates new economic activity. That is where the real multiplier effect lies,” he said. Furthermore, the long-term economic benefits do not only come from state revenue or regional profit-sharing funds. The more important aspect is the ability to transform gas resources into economic activity that continues to grow for decades. Therefore, Aceh needs to seize the South Andaman momentum as a starting point for gas-based industrial development. This step is also in line with the national policy direction that encourages the downstreaming of various strategic commodities so that Indonesia no longer merely supplies raw materials. Tutuka mentioned the fertiliser industry as one of the most realistic sectors to develop in Aceh because it has a clear market and continuously increasing demand. In addition, the petrochemical and methanol industries also have promising prospects given the still large domestic demand. However, the choice of industry type must be based on comprehensive market studies and economic analysis. “There are many options. It could be fertiliser, petrochemicals, methanol, or other industries. But everything must be calculated properly. We must look at market needs so that the industry is truly sustainable,” said Prof Tutuka Ariadji.