Indonesia Pushes Shell and BP-AKR for Immediate Refinery Construction

REPUBLIKA.CO.ID, JAKARTA -- Minister of Energy and Mineral Resources Bahlil Lahadalia has urged private fuel companies to immediately start building refineries and fuel facilities in Indonesia, saying the move is vital to strengthen energy resilience and reduce costly dependence on imported fuel.

Bahlil stated that, for now, the government is addressing the shortage of imported fuel allocations for business entities by allowing direct purchases from Pertamina. However, going forward, private fuel companies will be required to develop their own facilities, whether refineries or fuel terminals (TBBM), within Indonesia.

“That’s the next step. I believe our business partners are already considering building refineries beyond Pertamina,” Bahlil said at a press conference at the ESDM Ministry on Friday (19/8/2025).

According to him, private sector involvement in refinery development is crucial to strengthening national energy resilience. Since 2015, the government has issued regulations to encourage private entities to build refineries and fuel infrastructure domestically. Refineries are also listed among 17 strategic downstream projects prioritized by the government. With local refineries, Indonesia would no longer need to rely heavily on importing finished fuel, which is more expensive than crude oil.

Domestic refinery development not only boosts energy independence but also creates jobs and improves the trade balance. Bahlil even envisioned the construction of a refinery with a capacity of 500,000 barrels per day as a breakthrough to secure a more stable and sustainable energy supply.

“We plan to build a refinery with a capacity of around 500,000 barrels per day. God willing, this will be one of the largest in the future, significantly improving our energy resilience,” Bahlil said.

The project is estimated to require an investment of 12.5 billion US dollars. Beyond reducing dependence on imports, it could save up to 182.5 million barrels of oil annually, equivalent to 16.7 billion US dollars, and create massive employment opportunities, including 63,000 direct and 315,000 indirect jobs.