Investment of Mubadala Energy in Indonesia’s Natural Gas Sector: An Analysis of the Role of Sovereign Wealth Funds (SWF) in the Energy Transition

Abstract

Purpose
This study examines the investment dynamics of Mubadala Energy as a representation of the Sovereign Wealth Fund (SWF) owned by the United Arab Emirates (UAE) that invests in Indonesia’s energy sector, particularly in the natural gas sector.

Method
A descriptive qualitative approach with a case study method employs, this study draws on corporate reports, national documents, and international publications.

Findings
The findings indicate that Mubadala Energy’s investment has contributed to Indonesia’s national energy security and economic growth. However, the direction of its investment remains focused on fossil energy, particularly natural gas, and this is not aligned with Indonesia’s energy transition agenda. Therefore, it slows the energy transition process in Indonesia.

Originality
By combining the International Political Economy (IPE) perspective with Sovereign Wealth Fund (SWF) concept, this study allows the analysis of the role and motives behind Mubadala Energy’s investment in Indonesia’s energy sector that functions as political-economic instruments of their home countries in pursuing long-term strategic interests. Meanwhile, Indonesia often faces structural power asymmetries that render it dependent on external actors in decisions related to national interests.