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Indonesia Pursues Offshore Energy Exploration under China’s Shadow

Wednesday, January 18, 2023

Indonesia’s decision to expand offshore energy exploration in controversial waters contested by China signals that Jakarta is prepared to take the risks entailed with challenging Beijing and dismissing the Chinese territorial claims, writes Aristyo Rizka Darmawan of the University of Indonesia. 

Indonesia Pursues Offshore Energy Exploration under China’s Shadow

Calculated risks to assert sovereignty: Indonesian offshore oil rigs in the Natuna Sea (Credit: Zaidan Hamiz / Shutterstock.com)

On January 2, Indonesia announced that it had approved plans for the development of an offshore gas field on the Indonesian continental shelf in the North Natuna Sea, located near the Indonesia and Vietnam border. Under the Special Task Force for Upstream Oil and Gas Business Activities (SKK Migas), the country’s oil and gas regulator, the project is estimated to entail a US$3.07 billion investment and will be operated by the British company Harbour Energy, with the output exported mainly to Vietnam by 2026. 

This is an important project for the economic development of and bilateral relations between Indonesia and Vietnam. But since the location of the Tuna field is in the southern section of the South China Sea, Indonesia is taking some risks and must be prepared for how China responds and what it might face as a result. Because the gas exploration site lies under Indonesia's continental shelf and in its exclusive economic zone, Jakarta has the sovereign right under the United Nations Convention on the Law of the Sea (UNCLOS) to exploit all the natural resources in its water column and on the seabed and subsoil. 

Despite Indonesia’s not being among the six parties locked in the South China Sea maritime dispute, China has maintained that its nine-dash line claim overlaps with some parts of the Indonesia Exclusive Economic Zone. In response to this, Indonesia has made clear that it does not recognize China’s assertion of its territorial sovereignty, which was rejected by the 2016 arbitral ruling on a case brought by the Philippines and heard at the Permanent Court of Arbitration in the Hague. Jakarta argues that it does not have any overlapping claim with Beijing.

The South China Sea with China's nine-dash line indicated: While Indonesia is not one of the six claimants, Jakarta does not recognize Beijing's position (Credit: shubhamtiwari / Shutterstock.com)

Chinese protests against Indonesia's oil exploration are not new. Previously, Indonesia has conducted offshore oil exploration in the Tuna Block, which is also located in the overlapping area between Indonesia's EEZ and China's nine-dash line. Beijing has taken a series of actions against Indonesia's oil exploration, including formal diplomatic notes or démarches, the summoning of ambassadors to demand clarification, the dispatching of the China Coast Guard to patrol around oil rigs, and the sending of a surveying ship to the area. These moves have raised tensions between China and Indonesian maritime law enforcement. The Indonesian Coast Guard (BAKAMLA) and the Indonesian navy have on many occasions tried to escort the Chinese survey ship out of Indonesian waters.

With the approval of this new offshore exploration project, the Indonesian government appears to have calculated the risks and anticipated some escalation of tensions with China. According to Dwi Soetjipto, the head of the SKK Migas, the Indonesian Navy are ready to protect the nation’s sovereign rights. 

Indonesia has just appointed a new armed forces chief from the Navy - Admiral Yudo Margono. He has identified the South China Sea issue as one of his most important concerns, stating that securing Indonesia's sovereign rights in the North Natuna Sea is one of his priorities. To do so, Margono plans to host a special joint operation that will involve not only the Navy but also the Army to protect Indonesian activities in the North Natuna Sea, including gas exploitation.

This commitment is important and necessary for Indonesia to be able to reiterate its sovereign rights without fear of illegal intrusion by any country. As part of the strategy to protect the North Natuna Sea, Indonesia last year introduced Presidential Regulation No. 41/2022 which aims to boost governance in the contested maritime area. Under the regulation, Jakarta has set some priorities for the development of the region, including fisheries, tourism and increasing defense capacity and presence.

...And the Code of Conduct talks continue: As ASEAN chair in 2023, Indonesia under the leadership of President Joko Widodo could move the negotiations forward towards conclusion (Credit: VCG)

...And the Code of Conduct talks continue: As ASEAN chair in 2023, Indonesia under the leadership of President Joko Widodo could move the negotiations forward towards conclusion (Credit: VCG)

Given this strategy and commitment, Indonesia appears fully aware of the risks from any possible response from China to its latest offshore energy exploration. While the military may be on alert and both sides face off on the sea, to avoid any escalation and limit the possibility of an accidental clash, Jakarta and Beijing need to intensify diplomatic communications and exchange. One way to do so is of course by continuing to pursue the negotiations for a Code of Conduct (CoC) on the South China Sea. After its turn as G20 president in 2022, Indonesia is chairing ASEAN (taking over from Cambodia), providing the opportunity for Jakarta under President Joko Widodo to set the agenda for the CoC talks, especially in regard to the geographical scope of the discussions.

That said, Indonesia's plan to proceed with offshore oil and gas projects in waters that China claims is an important course of action. Not only does it enforce Indonesia's sovereign rights to explore and exploit natural resources but it also reiterates Jakarta's refusal to recognize the contentious nine-dash line. Indonesia will have to be prepared for the risks entailed in this strategy, both through the bolstering of its defense capacity and its pursuit of diplomacy.

Opinions expressed in articles published by AsiaGlobal Online reflect only those of the authors and do not necessarily represent the views of AsiaGlobal Online or the Asia Global Institute

Author

Aristyo Rizka Darmawan

Aristyo Rizka Darmawan

University of Indonesia

Aristyo Rizka Darmawan is a lecturer in international law at the University of Indonesia and a visiting fellow at the S Rajaratnam School of International Studies (RSIS) at Nanyang Technological University (NTU) in Singapore. His research focuses on the law of the sea and maritime security in Southeast Asia.


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