Massive refinery project set to strengthen energy security and reduce oil import dependency.

The Indonesian government has announced plans to construct one of the nation’s largest oil refineries on Pemping Island, Batam, with a daily processing capacity of 500,000 barrels. This $12.5 billion investment aims to bolster national energy resilience, reduce reliance on imported oil, and stimulate job creation. The refinery, which is projected to generate 63,000 direct and 315,000 indirect jobs, is expected to significantly enhance Indonesia’s refining capabilities and cut annual oil imports by 182.5 million barrels, equivalent to a savings of $16.7 billion.

With global energy prices fluctuating, Indonesia is expanding its domestic refining capacity to secure a stable fuel supply and reduce trade deficits. The planned oil refinery in Batam will be strategically located near key energy infrastructure, ensuring efficient production and distribution.

Government’s Vision for Energy Independence

Indonesia’s Minister of Energy and Mineral Resources, Bahlil Lahadalia, emphasized that the Batam refinery project is part of the government’s broader strategy to ensure long-term energy security.

“We are building an oil refinery with a 500,000-barrel-per-day capacity. This is a major step towards improving our energy resilience,” said Bahlil on March 5, 2025.

The facility will process both domestic and imported crude oil, producing up to 531,500 barrels per day of refined petroleum products, including fuel for domestic consumption.

Strategic Location and Supporting Infrastructure

The refinery will be built on Pemping Island, located near Batam, Riau Islands, due to its existing energy infrastructure and proximity to key trade routes.

Deputy Minister of Energy, Yuliot Tanjung, highlighted the importance of this strategic location, stating:

“Pemping Island already has an established gas pipeline network. Additionally, an oil storage facility will be constructed on nearby Nipah Island, creating a fully integrated energy ecosystem.”

The oil storage terminal in Nipah Island will help enhance Indonesia’s strategic petroleum reserves, providing a buffer against supply disruptions and ensuring a more stable energy supply.

The $12.5 billion investment for the refinery is being facilitated by the Danantara Investment Authority, Indonesia’s sovereign wealth fund.

This project is expected to attract additional foreign and domestic investors, further strengthening Indonesia’s energy sector and supporting its industrialization goals.

In addition to energy security, the refinery will reduce Indonesia’s reliance on imported refined petroleum products, helping to stabilize fuel prices and support local industries.

Job Creation and Economic Impact

The Batam refinery project is expected to generate significant employment opportunities, with an estimated 378,000 jobs created during the construction and operational phases.

• 63,000 direct jobs in refinery operations, engineering, and logistics.
• 315,000 indirect jobs in construction, maintenance, and supporting industries.

These figures underscore the project’s potential to revitalize Batam’s economy and boost regional development.

The planned oil refinery in Batam represents a transformational project in Indonesia’s energy landscape, supporting self-sufficiency, economic growth, and job creation. By reducing import dependency and enhancing refining capacity, the government aims to position Indonesia as a regional energy powerhouse.

This project marks a major milestone in Prabowo Subianto’s vision for Indonesia’s energy independence, reinforcing the country’s commitment to sustainable growth and investment in critical infrastructure.

Sources: Batam News (2025), Warta Ekonomi (2025)

Keywords: Indonesia, Oil Refinery, Energy, Investment, Prabowo Subianto