Malaysian state energy company Petronas is planning a substantial expansion in Indonesia, which includes setting up a strategic hub in East Java and exploring projects in the country’s remote eastern regions, as reported by several media reports. Yuzaini Md Yusof, head of Petronas in Indonesia, explained that this “aggressive” expansion is encouraged by recent regulatory changes that make it easier to develop energy projects. This move aligns with the goals of President Prabowo Subianto’s administration, which took office this month and has committed to revitalizing Indonesia’s energy sector to address a long-term decline in production since the country’s days as an OPEC member.

Petronas currently operates four oil and gas blocks in Indonesia, three of which are located in East Java on the western side of the archipelago. The company’s first strategy is to establish a consolidated hub in East Java, linking production facilities and integrating logistics across these operations. In the long term, Petronas also plans to broaden its portfolio into eastern Indonesia, a region that remains largely unexplored by other operators.

East Java is expected to benefit from an infrastructure project slated for completion in December 2025, which will connect the eastern and western parts of the island. This pipeline will bridge supply from the eastern side with demand-heavy areas in the west, boosting the feasibility of Petronas’ expanded operations in the region. The company’s North Ketapang block is currently in the exploration phase, while the Hidayah field in the North Madura II block is expected to yield its first oil by 2027. Additionally, Petronas is developing a new gas field within the Ketapang block. According to Yuzaini, the improved infrastructure has made East Java an increasingly attractive location for energy operators, as reported by media reports.

Beyond East Java, Petronas is actively pursuing new opportunities in eastern Indonesia. The company recently acquired a 15 percent interest in the Masela gas project and signed a production sharing contract for the Bobara block offshore West Papua. The Bobara block, estimated to hold around 6.8 billion barrels of oil equivalent, represents Petronas’ first deep-water venture in Indonesia where it will operate as the primary operator. The company is also considering potential partnerships for the block to leverage shared expertise and resources. As per media report, Yuzaini noted that these acquisitions underscore Petronas’ commitment to exploring the untapped potential in eastern Indonesia, a region that presents high risks but significant prospects.

Petronas’ expansion reflects a broader strategic focus on Indonesia’s evolving energy landscape, with both East Java’s developed infrastructure and eastern Indonesia’s unexplored frontier offering distinct growth opportunities. This strategy not only strengthens Petronas’ footprint in Indonesia but also aligns with the Indonesian government’s objectives to revitalize the nation’s energy sector, potentially reversing its longstanding production decline.