Abu Dhabi-headquartered Mubadala Energy has announced a second consecutive significant gas discovery in the South Andaman area offshore Indonesia.

The Tangkulo-1 exploration well discovery has confirmed the deep-water potential of the South Andaman Gross Split PSC where it holds an 80% interest in a JV with London-listed Harbour Energy (20%).

Located approximately 65 kilometres offshore North Sumatra, Tangkulo-1 is the second deep-water discovery in Indonesian water after Mubadala made the Layaran-1 gas discovery in the South Andaman block in 2023. Layaran-1 has been estimated to have the potential to hold more than six trillion cubic feet (TCF) of excellent-quality gas-in-place.

The recent Tangkulo-1 gas and condensate discovery has placed Mubadala Energy and the South Andaman block at the centre of a promising North Sumatra deepwater play, according to Wood Mackenzie. 

This latest discovery adds further volumes to the area, bringing the total in-place resources to 11 trillion cubic feet (tcf) since Harbour Energy's initial Timpan discovery in 2022. Dr. Munish Kumar, senior analyst for upstream at Wood Mackenzie, expects that Indonesia's latest exploration area will continue to yield positive results. 

The Tangkulo well, situated 65 km offshore, has de-risked exploration prospects in the South Andaman block. The quality of the reservoir at Tangkulo is better than that of the Layaran discovery, with higher levels of porosity and permeability, as demonstrated by the high flow-test results, noted consultancy Wood Mackenzie.

"Multiple prospects exist across the South Andaman block, and the deepwater basin fan play extends over several blocks, providing confidence that further finds will be made", Dr Kumar added. 

Tangkulo-1 was drilled to a depth of 3,400 m in 1,200 m of water depth and encountered 80 m of gas column in a good quality Oligocene sandstone reservoir confirmed through an extensive data gathering campaign that includes obtaining a full core of 72 m, wireline logging, sidewall core, pressure and fluid sampling.

Utilising a new Drill Stem Test (DST) design, the well successfully flowed 47 million standard cubic feet per day (mmscf/d) of excellent gas quality and 1,300 barrels of condensate. Although testing was constrained by testing facilities, the estimated well capacity is 80-100 mmscf/d and over 2,000 barrels of condensate.

"When added to our recent success at Layaran-1, this game-changing discovery promises to transform Indonesia's and South East Asia's energy landscape and demonstrates that South Andaman is one of the world's most exciting energy plays," CEO Mansoor Mohammed Al Hamed said.

"By working with partners and harnessing our world-class technical capabilities, I am confident we can realise the full potential of this block, in line with our commitment to support the government's ambitious development timeframes. This news also strengthens our ability to play a proactive role in the energy transition through our gas-biased strategy."

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

It has already identified Tangkulo-1 as an important pillar in a potential cluster development story, with the discovery unlocking further potential in the southern part of the block and indicating an additional multi-TCF of prospective gas resource in nearby structures.

Mubadala has been present in Indonesia since 2004 and currently operate four offshore Production Sharing Contracts (PSCs) in the Makassar Strait, the Sebuku PSC with the producing Ruby gas field, and the West Sebuku PSC, plus the Andaman I and South Andaman Gross Split PSCs at the northern Sumatra offshore.

Mubadala is the operator of the Andaman I and South Andaman Gross Split PSCs with 80% interest and 30% interest in the adjacent Andaman II PSC.

Market development options

Wood Mackenzie reports that the current gas demand in North Sumatra stands at around 280 million cubic feet per day (mmcf/d), which could be a potential obstacle to developing large volumes. "The Tangkulo discovery improves the viability of a range of development options, including supplying local markets or exporting via LNG or pipeline," said Andrew Harwood, director of corporate and upstream research at Wood Mackenzie. "If the Tangkulo discovery and other nearby prospects are developed together, they could meet the domestic requirements, enabling Mubadala to explore export solutions for its Layaran find." 

Mubadala Energy will be keen to expedite the development planning process for its finds, encouraged by the record pace Eni is moving its Kutei basin discoveries into commercialisation. SKK Migas, the regulator for oil and gas in Indonesia, will likely also be urging Mubadala Energy to move quickly. According to Wood Mackenzie, the earliest date for gas to be available is in 2028, if a phased and fast-track development is implemented. However, first gas post-2030 may be a more realistic date given the complexities involved.  

 

"The latest Tangkulo discovery, following the giant Layaran discovery, has made Mubadala Energy the new ‘sweetheart' in Indonesia's exploration sector," said Andrew. "However, the next major challenge for the company will be to manage stakeholder expectations by balancing Indonesia's national requirements with its own corporate objectives."