$7.4 billion refinery revamp aims to cut fuel imports and boost domestic supply

Indonesia has taken a major step toward energy independence as the country accelerates efforts to reduce fuel imports and strengthen domestic production capacity.

A Landmark Upgrade for National Energy Capacity
President Prabowo Subianto on Monday inaugurated the US$7.4 billion upgrade of Pertamina’s Balikpapan refinery, now the largest in Indonesia. The modernization increased refining capacity from 260,000 to 360,000 barrels per day, reinforcing the country’s long-term strategy to meet rising domestic energy demand.

Reducing Dependence on Imported Fuel
Energy Minister Bahlil Lahadalia said the upgraded facility allows Indonesia to significantly cut fuel imports by boosting local gasoline production. The refinery can now produce 92-octane, 95-octane, and 98-octane gasoline, enabling private fuel retailers to source products domestically from Pertamina rather than relying on imports.

Gasoline Output and Import Cuts
According to Bahlil, the refinery can generate up to 5.8 million kilolitres of gasoline annually. This increase is expected to reduce Indonesia’s gasoline imports to 19 million kilolitres, down from approximately 24 million kilolitres previously, strengthening supply stability amid growing consumption.

Ending Gasoil and Jet Fuel Imports
The refinery upgrade, combined with Indonesia’s biodiesel mandate, is also expected to eliminate gasoil imports. Bahlil added that by 2027, Indonesia aims to stop importing jet fuel altogether, leaving crude oil as the only remaining energy import.

Cleaner Fuel and LPG Expansion
Beyond capacity growth, the revamp improves fuel quality by enabling the production of lower-sulphur fuel. Liquefied petroleum gas production capacity has surged to 384,000 metric tons per year, up from just 48,000 tons previously, potentially reducing LPG imports by 4.9 percent, according to Pertamina.

Petrochemical Production Adds Value
The project also includes a new petrochemical facility capable of producing 283,000 tons annually, including 225 tons of propylene. This expansion supports Indonesia’s downstream industrial development while maximizing value from refined products.

The Balikpapan refinery upgrade marks a strategic milestone for Indonesia’s energy security, signaling a shift toward self-reliance, cleaner fuel production, and stronger downstream industries. For Indonesia and Singapore, the move underscores regional energy resilience and the growing role of Southeast Asia’s largest economy in shaping stable fuel supply chains.

Sources: CNA (2026) , The Star (2026)

Keywords: Balikpapan Refinery, Pertamina Upgrade, Indonesia Fuel Policy, Energy Independence