New Indonesian President signs off $7bn gas project while reaffirming 2050 net zero target

The $7bn Tangguh Ubadari CCUS Compression (UCC) project will comprise development of the Ubadari gas field, enhanced gas recovery through CCUS and onshore compression, expanding and utilising the existing infrastructure at the Tangguh LNG facility in Papua Barat, Indonesia. It is expected to exploit around 85bn m3 of additional gas resource, providing feedstock to the existing liquefaction facility. The project also aims to sequester around 15mn tonnes of CO2 from Tangguh’s emissions in its initial phase.

Production at the Ubadari field is expected to begin in 2028. The Tangguh liquefaction facility, which entered operations in 2009, was expanded with a third train last year, bringing total capacity to 11.4mn t/y.

Once completed, the project will feature three injection wells, one offshore injection platform, one offshore CO2 pipeline, and onshore facilities for CO2 removal, processing and compression.

BP is the operator of the Tangguh production sharing contract, holding a 22% participating interest. The partners are MI Berau (16.3%) CNOOC Muturi (13.9%), Nippon Oil Exploration (12.23%), KG Berau Petroleum (8.56%), KG Wiriagar Petroleum (1.44%) and Indonesia Natural Gas Resources Muturi (7.35%).

BP expects natural gas to ‘play a two-fold role in Indonesia’s energy mix’ as the country ‘transitions to low-carbon energy amidst an increased energy demand for economic growth’ – first as ‘a lower-carbon alternative’ and second as ‘a reliable energy source for power generation’.  

The company also states: ‘As Indonesia’s largest domestic gas producer, BP and the Tangguh LNG joint venture partners support the government of Indonesia’s target to achieve 12bn ft3 [340mn m3]/d of gas production by 2030 and at the same time achieve [the] carbon emissions reduction target under the nationally determined contribution (NDC) by 2030.’

According to the Energy Institute’s Statistical Review of World Energy, Indonesia as a whole produced some 64.3bn m3 of natural gas in 2023, consuming some 45.4bn m3.

BP announced the Tangguh UCC FID in November at a meeting in London between its CEO Murray Auchincloss and Indonesian President Prabowo Subianto. ‘This major investment highlights BP and partners’ strong confidence in Indonesia’s investment climate and strengthening their business activities in the country,’ the company said at the time.

Indonesia’s bold move towards clean energy

President Prabowo, who was inaugurated in October 2024, plans to realise 8% economic growth for Indonesia under his presidency. His government has also set an ambitious target for the country to phase out fossil fuel power generation and add 75 GW of renewable energy by 2040.

At the recently concluded COP29 Summit in Baku, Azerbaijan, Indonesia’s Special Envoy for Energy and Climate Change, Hashim Djojohadikusumo, outlined plans for Indonesia to increase power generation capacity by 100 GW within the next 15 years, requiring an investment of $235bn. Of this, 75% is expected to come from renewables, including hydropower (25 GW), solar (27 GW), wind (15 GW), geothermal (7 GW) and bioenergy (1 GW). The plan also includes 28 GW of additional thermal baseload from coal and gas, and apparently 5 GW from nuclear power.

President Prabowo also aims to achieve net zero emissions by 2050, a goal he reiterated at the recent G20 Summit in Rio de Janeiro. This includes stopping all coal-fired and other fossil fuel power generation within the next 15 years, alongside the additional generation assets outlined above.  

According to the Energy Institute’s Statistical Review of World Energy, Indonesia generated some 350.6 TWh of electricity in 2023, of which coal accounted for nearly 62%, gas 17%, renewables 12%, hydro 7% and oil 2%.

While applauding President Prabowo’s vision, the Centre for Research on Energy and Clean Air (CREA) believes this falls short of the necessary capacity to replace coal, oil, and gas by 2040.  

CREA expects the $20bn Just Energy Transition Partnership (JETP), launched during Indonesia’s G20 Presidency in 2022, to play a crucial role in steering away from coal dependence, through the implementation of its Comprehensive Investment and Policy Plan (CIPP) in parallel with domestic policy reform.

‘The recently announced target of an additional 75 GW of renewables and 5 GW of nuclear by 2040 would only deliver fossil-free electricity at about 35% of the projected national electricity demand,’ notes CREA. ‘In other words, in order to meet the projected zero fossil electricity demand in 2040, Prabowo’s vision requires about 25% additional clean energy generation beyond what is outlined in the JETP CIPP. This means that Indonesia’s clean energy targets must be more than doubled in order to make Prabowo’s vision a reality.’

CREA believes that updating Indonesia’s clean energy targets to align with Prabowo’s vision of a fossil fuel phase out by 2040 could potentially double the country’s clean energy investments.

It is also calling on the Indonesian government to remove barriers to low-cost clean power sources to help achieve Prabowo’s goals.