Indonesia aims to produce 900,000 b/d-1 mil b/d of oil by 2028-2029

The Indonesian government aims to produce 900,000 to 1 million b/d of oil by 2028-2029, its energy and mineral resources minister, Bahlil Lahadalia, said Jan. 30.

To achieve this, the country will expedite timelines for 300 explored wells which do not have Plans of Development yet, work on available idle wells and optimize existing ones through technology like Enhanced Oil Recovery (EOR).

About 40% of the country's 40,000 wells are idle and available for reactivation, and those that still contain oil have already been mapped, the ministry said.

"We have been drilling vertically. In America, the drilling is now horizontal so that the oil that has never been extracted can also be lifted; this is now possible by utilizing EOR technology," said Lahadalia.

This interim goal comes about five years after the country first set ambitious output targets of 1 million b/d of oil and 12 Bcf/d of gas by 2030, in a bid to boost energy security and restore the country's output levels last seen in the 1990s when Indonesia was still a key OPEC member.

However, Indonesia's oil production levels in 2024 stood at around 600,000 b/d, a far cry from its 1.6 million b/d of oil output in 1996-1997, while its output target for 2025 is 605,000 b/d.

Meanwhile, Indonesia imported about 1 million b/d of oil in 2024, Lahadalia said, as rising domestic demand outpaces production growth.

"It's a reversal from 1996-1997 to 2024," he said, adding that Indonesia could export 1 million b/d of oil back in its heyday.

He also noted that 58% of Indonesia's oil is imported from Singapore – an irony considering that the neighboring country is not an oil producer.

This comes after Indonesia had improved oil revenue sharing terms to encourage upstream investment. Under the new gross split scheme, the contractor's share can reach 75%-95%, compared to before, when the contractor's share was highly variable and, in certain conditions, could be as low as 0%.

Crude export cuts

To meet rising domestic demand and accelerate energy self-sufficiency goals, Indonesia will divert all government crude oil export allocations for domestic processing, Lahadalia said in a statement Jan. 27.

The government estimates Indonesia's crude oil exports at around 28 million barrels in 2025, and nearly half of them targeted for domestic refinery use.

Crude oil from contractors must also be processed and blended to meet the specifications required for Indonesian domestic refineries, he added.

"We have instructed domestic refineries to utilize all crude oil, including those previously considered non-compliant with specifications. As a result, crude oil exports will continue to decline," Lahadalia said.

The Indonesian government will continue to expand capacity and technological flexibility of refineries, with major ones such as Balikpapan, Cilacap, and Dumai already capable of processing crude oil with diverse specifications, including types previously considered non-compliant with standards.

The government is also pushing for new refineries, such as those in Tuban and Balongan, to be built more quickly, boosting processing capacity in the coming years, added Lahadalia.

State-owned Pertamina currently owns and operates six oil refineries with a total installed capacity of 1.05 million b/d, but this is insufficient to meet domestic refined product demand of around 1.5-1.6 million b/d. Therefore, the company imports oil products on both term and spot basis to supplement its production.

On Jan. 30, Pertamina's refining arm, Kilang Pertamina Internasional introduced an ultra-low sulfur diesel containing 10 ppm sulfur, known as Diesel X, which meets EURO V standards and is environmentally friendly. The fuel is processed at the Balongan refinery, which has a production capacity of up to 200,000 barrels per month.

Earlier this month, Pertamina also launched other products, including B40 biodiesel and Sustainable Aviation Fuel, which is made from used cooking oil.