ASEAN Beat | Economy | Southeast Asia

Indonesia Approves First Phase of Key Offshore Gas Development

Despite lying within the country’s EEZ, the Tuna offshore oil and gas block lies within China’s “nine-dash line” South China Sea claim.

Indonesia Approves First Phase of Key Offshore Gas Development

An aerial view of Natuna Besar, the largest island in Indonesia’s Natuna archipelago.

Credit: Flickr/Stratman²

Indonesia’s government has approved the first phase of its development of the Tuna offshore gas field in the South China Sea, Reuters reported yesterday, just over a year after a protracted stand-off with China over disputed waters near the Natuna islands.

The announcement was made yesterday by SKK Migas, the country’s upstream oil and gas regulator, which said that the field would require a total investment of around $3.07 billion. Located in the South China Sea close to the maritime border between Indonesia and Vietnam, the Tuna field is expected to produce 115 million standard cubic feet per day by 2027, Reuters quoted SKK Migas spokesperson Mohammad Kemal as saying. Much of this will reportedly be exported to Vietnam.

As in many parts of the South China Sea, the exploitation of resources also has implications for the simmering maritime disputes between China and rival claimants, Malaysia, Vietnam, Brunei, the Philippines, and Indonesia, as SKK Migas chairman Dwi Soetjipto acknowledged in a statement yesterday.

“There will be activity in the border area which is one of the world’s geopolitical hot spots,” Dwi said in the statement, according to Reuters. “The Indonesian navy will also participate in securing the upstream oil and gas project so that economically and politically, it becomes an affirmation of Indonesia’s sovereignty.”

The Tuna block, which was discovered by the company Harbour Energy in 2014, sits approximately 140 nautical miles north of Natuna Besar, the main island in the Natuna archipelago. While the block sits within Indonesia’s 200-nautical-mile Exclusive Economic Zone (EEZ), which under international maritime law grants it the sole right to exploit any resources present within the zone, China’s audacious claim to the majority of the South China Sea, which includes large swathes of rival claimants’ EEZs has prevented work from moving forward.

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Over the past decade and a half, Chinese coast guard and maritime militia vessels have disrupted oil and gas exploration and drilling by Vietnam, Malaysia, and the Philippines in their respective EEZs. There have also been numerous incidents in which Chinese coast guard and fishing vessels have entered Indonesia’s EEZ near the Natuna islands, which are bisected by China’s “nine-dash line” claim. Some have involved Indonesian authorities pursuing and seeking to detain Chinese trawlers, prompting interventions from Chinese coast guard vessels.

China has also made attempts to prevent Indonesian attempts to exploit the Tuna gas field. As the Asia Maritime Transparency Initiative of the Washington-based Center for Strategic and International Studies noted in 2021, Chinese law enforcement vessels maintained a months-long presence around the Tuna block starting in July of that year, after a semi-submersible rig, the Noble Clyde Boudreaux, arrived to drill two appraisal wells on behalf of the U.K-based firm Premier Oil (now Harbour Energy).

Over the next four months, Chinese and Indonesian ships shadowed each other around the oil and gas field, sometimes coming into unnerving proximity. At the same time, China dispatched a survey ship, the Haiyang Dizhi 10, which spent seven weeks surveying an adjacent gas field. During the stand-off, Reuters reported that China’s government told Indonesia to stop drilling for oil and natural gas in areas claimed by China. It also reportedly protested Indonesia’s 2017 decision to change the name of the waters within its EEZ to the North Natuna Sea, to assert its sovereignty over the area.

The Indonesian announcement that it is moving forward with the development of the Tuna block is therefore likely to prompt a swift reaction of some kind by Beijing, despite Jakarta’s clear right to do exploit these resources under international maritime law. As such, we can expect more tense encounters around the Natuna islands in 2023.