Jakarta. Indonesia and Malaysia have agreed to jointly develop the resource-rich Ambalat Block in the Sulawesi Sea, marking a major step toward resolving a decades-old maritime dispute while unlocking billions in untapped oil and gas reserves.

President Prabowo Subianto and Malaysian Prime Minister Anwar Ibrahim announced the agreement at Jakarta’s Merdeka Palace on Friday, describing the “joint development” model as a pragmatic solution while legal boundaries remain under negotiation.

“We have agreed that while we resolve the legal aspects, we will begin economic cooperation under what we call joint development,” Prabowo said.

“Whatever we find in these waters, we will exploit together. We want to work for the benefit of our people and our nations,” he added.

The Ambalat Block, located near the maritime border off East Kalimantan, covers approximately 15,235 square kilometers and is believed to hold up to 1 billion barrels of oil and 40 trillion cubic feet of gas. Production could yield up to 40,000 barrels per day over three decades, potentially boosting oil output for both countries.

The block was subject to a maritime dispute that dates back to Malaysia’s 1979 map claim over Ambalat, which Indonesia and ASEAN neighbors rejected. A 2002 International Court of Justice ruling on the nearby Sipadan-Ligitan islands did not resolve maritime boundaries, leaving Ambalat in limbo and prompting periodic naval standoffs.

Despite tensions, both countries previously issued overlapping exploration rights, with Indonesia granting concessions to Shell and Unocal in the early 2000s, later transferred to Italy’s ENI and Chevron before Pertamina took over East Ambalat under a 30-year contract in 2016.

In 2023, Indonesian officials began technical data sharing with Malaysia’s Petronas ahead of the agreement, paving the way for the current deal. The partnership could mirror the existing cooperation between Pertamina and Malaysia's oil company Petronas on the Masela gas block in Maluku.

Anwar, who previously expressed interest in deepening energy ties with Jakarta, signaled Malaysia’s readiness to allow Petronas to explore new ventures with Pertamina beyond the current joint projects.

Beyond Ambalat, Prabowo and Anwar also discussed expanding bilateral trade, enhancing land and maritime border management, and improving protections for Indonesian migrant workers in Malaysia, signaling deepening ties under both leaders’ new administrations.