Indonesia Diversifies Energy Supply to Reduce Reliance on Middle East Imports
Indonesia is taking steps to diversify its energy supply sources as geopolitical tensions in the Middle East raise concerns about global fuel security. According to Energy and Mineral Resources Minister Bahlil Lahadalia, imports from the region currently account for around 20% of Indonesia’s fuel supply. The government is therefore securing alternative suppliers and strengthening domestic refining capacity to reduce reliance on a single region while maintaining stable energy availability.
Speaking during a virtual press conference monitored from Jakarta, Bahlil said the move aligns with a broader strategy to improve national energy resilience amid global uncertainty. Details of the policy were outlined in a report by ANTARA News. The initiative forms part of wider government efforts to strengthen economic and technological resilience, similar to programmes highlighted in discussions on Indonesia’s push for smart technology and innovation to support sustainable development.
Reducing Dependence on a Single Energy Source Region
Bahlil stated that approximately one-fifth of Indonesia’s total fuel demand is currently met through imports from the Middle East. In response to potential disruptions linked to regional instability, the government has sought alternative suppliers from other countries.
“Of our total fuel demand, imports from the Middle East account for around 20 percent,” — Bahlil Lahadalia, Minister of Energy and Mineral Resources, Indonesia
He added that under the direction of President Prabowo Subianto, the government has already secured replacement sources to anticipate potential supply disruptions.
“Amid tensions in the Middle East, the government has moved to find alternative supply sources to replace those from the region, and we have secured them,” — Bahlil Lahadalia, Minister of Energy and Mineral Resources, Indonesia
Expanding Domestic Refining Capacity
Alongside import diversification, Indonesia is expanding domestic fuel production through refinery development projects. One key initiative is the Refinery Development Master Plan (RDMP) in Balikpapan, which is expected to increase output capacity significantly.
The Balikpapan project is designed to produce approximately 5.6 million kilolitres of gasoline and about 4.5 million kilolitres of diesel. Increasing domestic refining capacity is intended to strengthen national energy security and reduce exposure to external supply disruptions.
Balancing Imports and Domestic Supply
Indonesia’s energy imports will continue to focus primarily on crude oil. Fuel grades such as RON 90, RON 92, RON 95, and RON 98 are supplied partly from domestic production and partly through imports, mainly from Southeast Asia.
For liquefied petroleum gas (LPG), the government has begun shifting supply sources away from the Middle East. The United States is among the alternative suppliers under consideration as Indonesia broadens its import base.
Indonesia currently requires about 8.3 million tonnes of LPG annually. Domestic production stands at approximately 1.6 million tonnes, leaving around 7 million tonnes to be covered through imports.
Trade Agreement with the United States
The diversification strategy also aligns with a US$15 billion trade agreement between Indonesia and the United States. Under the arrangement, Indonesia plans to import LPG worth around US$3.5 billion, crude oil valued at roughly US$4.5 billion, and refined fuel products estimated at about US$7 billion.
Bahlil emphasised that the agreement does not increase Indonesia’s total energy import volume. Instead, it focuses on shifting supply sources while maintaining existing demand levels and market-based pricing.
The move reflects broader policy efforts to strengthen resilience across sectors, complementing initiatives that address national capacity building and resilience in areas such as digital safety and institutional resilience. Together, these initiatives signal an increasing focus on reducing vulnerability to external shocks while maintaining stable national development.
