Indonesia’s Crude Oil Imports Will Increase as Domestic Production Is Low

crude oil

The National Energy Council (DEN) said that the new oil refineries construction and the development of existing ones will increase Indonesia’s crude oil imports. This is because the existing refineries already require about 1 million barrels per day (bpd) of crude oil.

Meanwhile, Indonesia’s crude oil production is currently at 620,000 bpd. Additionally, there is a potential natural decline in production that continues to occur.

“We are still short by 300-400 bpd, and that part belongs to the contractors who take it to their country. So, we import crude oil as a refinery raw material by about 500,000 bpd,” said Secretary-General (DEN) Djoko Siswanto in Energy & Mining Outlook, quoted on Friday (24/2/2023).

This means that if new refineries operate, 100% of Indonesia’s crude oil needs will come from imports. Even without new refineries, Indonesia’s crude oil imports are already increasing.

In addition, Djoko revealed that every liter of gasoline produced from a refinery requires at least 3 liters of crude oil. So, when new refineries are added, crude oil imports will also increase by three times the current needs.

“Because 1 liter of crude oil becomes 30% gasoline, so much percent diesel, and the rest becomes asphalt residue. So, we need 3 liters of crude oil to produce one liter of gasoline, which means that our crude oil imports will increase,” he said.

As it is known, after decades of waiting, the capacity of oil refineries in Indonesia will finally increase. The refinery capacity will increase by 425,000 bpd to 1.425 million bpd from the current 1 million bpd.

Pertamina’s President Director, Nicke Widyawati, previously said that the additional refinery capacity will come from a new refinery project (Grass Root Refinery/GRR) and improvements to the quality and specifications of existing refineries, known as the Refinery Development Master Plan (RDMP).

The additional refinery capacity is targeted to be fully operational in 2027, with one of the projects, the RDMP Balongan, targeted to be completed this year, which will add a refinery capacity of 25,000 bpd.

She acknowledged that the additional refinery capacity is lower than the initial target to increase the refinery capacity to 2 million bpd.

This was due to the national plan to decrease the use of fossil fuels to 20% in 2050.

As a result, the company revised its target to increase the crude oil processing capacity to 1.425 million bpd from the previous target of 2 million bpd. Currently, Pertamina’s full refinery capacity is 1 million bpd, with an average operational capacity of around 800,000 bpd.

Nicke explained that the revision of the additional refinery capacity target was made due to a policy push for a transition to clean energy. Therefore, this also affected the plan to build a new refinery project in Bontang, East Kalimantan, with a capacity of 300,000 bpd, which was eventually canceled.