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Causal case of oil imports, trade deficit
Every time the country’s trade balance is in deficit, the oil and gas sector is usually blamed for its large share of imports.
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Engineers work at an oil and gas processing site on this undated photo. (Antara/R.Rekotomo)
Indonesia posted a record-breaking US$2.5 billion deficit in April, the largest monthly deficit recorded since 2013, according to Statistics Indonesia (BPS).
Every time the country’s trade balance is in deficit, the oil and gas sector is usually blamed for its large share of imports.
The government has tried to curb oil imports by requiring state energy holding company Pertamina to prioritize the use of domestic crude and through the biofuel mix policy.
However, energy expert Pri Agung Rakhmanto from Jakarta-based research group Reforminer said the issue would remain unsolved unless the government settled core problems in the industry.
“[The burdening import will continue] as long as the underlying problems in the upstream oil and gas sector are not addressed, such as declining production,” he said.
He also cited other problems, such as a lack of development in the capacity of refineries, which would eventually drive fuel imports, and relatively low fuel prices that drive further consumption.
