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Analysis: Bahlil redirects crude oil, gas exports to domestic supply
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Investment Minister Bahlil Lahadalia prepares to speak with reporters at the ministry’s building in Jakarta on Jan. 24, 2023. (The Jakarta Post/Deni Ghifari)
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s part of President Prabowo Subianto’s flagship program to achieve energy self-sufficiency, Energy and Mineral Resources Minister Bahlil Lahadalia announced a halt to crude oil and gas exports. Instead, all crude oil will be processed in domestic refineries to boost national fuel production and strengthen energy security, with natural gas prioritized for the domestic industrial downstream industry.
In addition to halting crude oil exports, the government is taking proactive measures to ensure that all domestically produced oil is utilized efficiently. Crude oil from contractors that do not meet domestic refinery specifications will also be processed and blended to ensure compatibility. Bahlil emphasized that this policy shift is a strategic step to accelerate Indonesia’s energy self-sufficiency.
Crude oil exports this year are projected to reach around 28 million barrels (approximately 13.8 percent of yearly production). Out of this volume, a significant portion – estimated between 12 and 13 million barrels is targeted to be processed domestically. This policy is anticipated to enhance national fuel supply while concurrently diminishing reliance on fuel oil imports.
State oil and gas holding company Pertamina operates six refineries in Indonesia with a total processing capacity of 1,046,700 barrels per day (bpd) of crude into fuels to supply the domestic fuel market. The three largest refineries are Cilacap, with 348 million barrels of crude per day (MBCD), Balikpapan (260 MBCD) and Dumai (170 MBCD). Furthermore, the government is accelerating the construction of new refineries, such as the Tuban and Balongan projects, to enhance processing capacity in the years to come.
The ministry is actively working to improve the capabilities and adaptability of domestic refineries. Significant advancements have been made, with major refineries now equipped to process a wider range of crude oil types, including those previously deemed unsuitable.
Despite its large capacity, most crude oil is imported as domestic production of crude oil has been declining for years from over 1 million bpd in the 2000s to 578,272 bpd in the first half of 2024, representing a 4.53 percent decrease from the 605,000 bpd from the preceding year's corresponding period.
In addition to crude, Indonesia produce 2.86 billion standard cubic feet per day (SCFD) of gas (approximately 494,000 bpd oil equivalent).
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