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View all search resultsPlan to import US oil, gas at odds with energy security goal
Indonesia’s commitment to import $15 billion worth of oil and gas from the United States under a recently agreed bilateral trade deal clashes with the country’s long-term objectives for energy security and diversification.
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Liberian flagged Hallasan Explorer LPG tanker navigates the Panama Canal on Jan. 20, in Panama. (AFP/Arnulfo Franco )
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commitment to import US$15 billion worth of oil and gas from the United States clashes with Indonesia’s long-term energy security objectives, experts warn, raising questions over economic viability, strategic dependence and a lack of transparency in the negotiations.
Presented as a key outcome of a bilateral trade deal earlier this month, the promise to import crude oil, liquefied petroleum gas (LPG) and other fuel from the US will see state-owned oil and gas giant Pertamina shift to American suppliers for much of its energy procurement.
The agreement, however, has raised alarm among analysts who question whether it aligns with Indonesia’s energy strategy or exposes the country to long-term risks.
“Our GDP depends on energy affordability and energy security. If this agreement increases our dependence on longer, costlier supply routes and undercuts domestic capacity, it could damage our national interests in the long run,” Moshe Rizal, who heads the investment committee of the Association of Oil and Gas Companies (Aspermigas), told The Jakarta Post on Tuesday.
According to Moshe, Indonesia gained little from the US tariff negotiations in exchange for a major shift in energy sourcing.
“We’re making concessions without securing real benefits,” he said. “What’s being sold as a tariff reduction is misleading. Many of our exports enjoyed zero-tariff status. In some cases, we’re going from zero to 19 percent. That’s not a benefit, it’s a downgrade.”
Under the trade deal, the 19 percent tariff will reportedly apply to Indonesian exports on top of existing sectoral rates, meaning some Indonesian-made goods that once entered the US duty-free may now incur additional charges.
