Indonesia Plans to Build Oil Reserve Facility Near Singapore to Reduce Imports
Jakarta. Energy and Mineral Resources Minister Bahlil Lahadalia unveiled plans to build an oil reserve storage facility on an island near Singapore as part of efforts to strengthen Indonesia's energy resilience.
"We will build storage on an island near Singapore, with a storage capacity of about 30-40 days," Bahlil said in Jakarta on Wednesday.
The new facility will allow state-owned energy firm Pertamina to purchase oil in bulk, reducing reliance on the volatile spot market. This move will enable the company to wait for favorable oil prices before making purchases.
Located near Singapore, the facility also seeks to address Indonesia's heavy dependence on its neighbor, which currently supplies around 60 percent of the country's fuel imports despite lacking domestic oil resources.
"Singapore is not an oil producer, but they can supply 60 percent to Indonesia," Bahlil said.
The project is expected to lower costs related to third-party storage, transportation, and intermediary fees, enabling more direct and cost-efficient oil purchases.
Bahlil pointed out Indonesia's low oil supplies and said that in times of crisis or conflict, the nation could only last for about 21 days based on national storage capacity. He emphasized the importance of increasing storage capacity to enhance energy resilience.
"This is a geopolitical issue. If our country goes to war, our oil reserves and storage can only last for 21 days," he said.
In addition to the storage facility, Bahlil outlined government efforts to reduce annual energy import costs by Rp500 trillion. One key initiative is optimizing Indonesia’s oil wells. Of the 44,900 wells across the country, approximately 16,600 are inactive, and 5,000 of these can be revitalized to boost national oil production.
According to data from Statistics Indonesia (BPS), the value of Indonesia’s oil imports reached $30.41 billion from January to October 2024, an increase of 14.32 percent compared to $28.97 billion in the same period the previous year.
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