Mubadala Energy announces offshore gas discovery in Indonesia

The Layaran-1 discovery will 'de-risk' multiple trillion cubic feet of prospective gas resources in the area

Layaran 1 Drillship. With an 80 per cent working interest in South Andaman, Mubadala Energy is the largest net acreage holder in the area. Photo: Mubadala
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Mubadala Energy, the oil and gas unit of Abu Dhabi’s Mubadala Investment Company, has made a new gas discovery at the Layaran-1 exploration well off North Sumatra in Indonesia.

The discovery has the potential for more than 6 trillion cubic feet of gas, or about 170 billion cubic metres, making it one of Indonesia’s largest gas finds.

Mubadala Energy said the successful outcome of the Layaran-1 discovery would “de-risk” multiple trillion cubic feet of prospective gas resources in the area, providing the foundation for future organic growth and additional exploration drilling activities in 2024.

The offshore well produced gas at a rate of more than 30 million standard cubic feet per day (mmscf/d), the company said on Tuesday.

With an 80 per cent working interest in South Andaman, Mubadala Energy is the largest net acreage holder in the area.

“With our strategy to expand our gas portfolio to support the energy transition, this development offers material commercial opportunities and adds momentum to our strategic growth story," said the company's chief executive, Mansoor Al Hamed.

"This is ... a huge milestone for Indonesia’s and South-East Asia’s energy security."

The discovery marks the second successful well exploration for Mubadala Energy in the Andaman area after a gas find at the Timpan-1 well in July last year.

In October, Italian energy company Eni announced a significant gas discovery off East Kalimantan in Indonesia.

Preliminary estimates indicated a total discovered volume of 5 trillion cubic feet of gas, with a projected condensate content up to 400 million barrels, the company said at the time.

Indonesia, one of the world's largest coal exporters and the biggest economy in South-East Asia, plans to generate at least 51 per cent of its total energy from renewable sources by 2030.

The country also aims to become carbon neutral by 2060 or sooner, with renewable energy providing up to 85 per cent of the energy mix.

Last month, Pertamina Geothermal Energy, a unit of Indonesia's state energy company Pertamina, signed an agreement with Chevron and Mubadala Energy to explore geothermal projects in the country.

In July, Mubadala Energy and Pertamina signed an agreement to explore carbon capture initiatives in Indonesia.

Mubadala Energy has assets and operations spanning 11 countries, primarily in the Mena region, Russia and South-East Asia.

The company, which was previously known as Mubadala Petroleum, has been operating in Indonesia since 2004.

Several countries are looking to substitute coal with natural gas, which is considered a cleaner fossil fuel compared to coal.

Natural gas emits fewer pollutants and greenhouse gases when burnt to generate energy.

Russia’s invasion of Ukraine last year pushed gas prices to record highs, forcing traders in some developing economies to boost their imports of coal.

Global coal demand is set to drop next year and “plateau” through 2026 in a "historic turning point", the International Energy Agency said in a report last week.

Coal consumption, which will hit a record high this year, is projected to fall by 2.3 per cent in 2026, driven by a major expansion of renewable energy capacity in the next three years, the agency said in its annual market report.

Coal demand will rise by 1.4 per cent this year, surpassing 8.5 billion tonnes for the first time, the agency said.

Updated: December 19, 2023, 11:17 AM