Indonesia has achieved a major milestone by ranking second out of 52 countries for the best energy security in the world, according to JP Morgan. This recognition highlights that Indonesia still “shines” despite global geopolitical tensions.
Indonesia’s Energy and Mineral Resources Minister, Bahlil Lahadalia, said that Indonesia’s current energy situation is challenging. Once a prominent oil exporter and was an OPEC member, Indonesia is now a big oil and gas importer.
Currently, domestic oil production is about 605.000 barrels per day (bpd). However, the national demand itself has reached 1,6 million bpd. Thus, to fulfil national consumption needs, Indonesia relies on oil imports.
Coal Production to Strengthen the Domestic Energy Foundation
Indonesia’s high ranking is supported by a robust energy foundation. JP Morgan reports, the nation’s energy security is heavily bolstered by domestic coal production, which currently fulfils approximately 48 percent of the national final energy consumption. In the other hand, domestic natural gas accounts for 22 percent, while renewable energy sources contribute 7 percent.
This strong reliance on internal resources has placed Indonesia in an “elite” group of nations, including China, India, South Africa, Vietnam, and the Philippines. These countries have significantly benefited from their domestic production in facing global energy shocks.
Indonesia’s Innovative Strategies
One of most innovative strategies involves “waking up” thousands of dormant oil wells. Many of these are remnants of the Dutch colonial era that still have significant reserves.
Indonesia’s government is now trying to incentivize contractors to use advanced technology to extract this oil. Moreover, local communities are also involved to manage these wells legally.
Some projects are delayed by the operators. Thus, the government warns and no longer tolerate project delays by giving a strict six-month ultimatum to the operators.
For the example, Masela Block in Maluku has remained stagnant for nearly 30 tears. Then, after giving the ultimatum, the US$21 billion project finally moved forward and is now in the construction bidding stage.
Another strategy is that in the year of 2026, Indonesia stated that there will be no more importing diesel (solar). This was achieved through the mandatory biodiesel program, which blends diesel with palm oil. This shift allows domestic palm oil products to replace millions of liters of imported fuel.
Indonesia is also targeting gasoline by utilizing abundant of local resources, such as cassava, corn, and sugarcane. By 2028, Indonesia plans to implement at least a 20 percent ethanol blend (E20). This movement is expected to slash gasoline import by 8 million kiloliters.
In addition, to reduce the burden of LPG imports, Indonesia is pivoting toward Compressed Natural Gas (CNG). CNG itself is 30 percent to 40 percent more affordable than LPG. CNG is also already being rolled out for some households, restaurants, dan social program, such as Free Nutritious Meals (Makan Bergizi Gratis/MBG).
Indonesia also diversifying its crude oil sources. Instead of relying on the Middle East, Indonesia now imports from other regions, like Africa, America, and Russia. Through these bold steps and strategies, no wonder if Indonesia is successfully building a resilient energy foundation for its future.
