Government sets up BLU to handle Russian crude oil imports – reasons explained

The Ministry of Energy and Mineral Resources (ESDM) is preparing regulatory frameworks to establish a Badan Layanan Umum (BLU) to manage crude oil imports from Russia. This aims to provide import flexibility and address differing specifications from global supply sources.

Deputy Energy Minister Yuliot Tanjung explained that the government has issued a Presidential Regulation (Perpres) to regulate the import mechanism, including through BLU. He noted that the government can now task state-owned enterprises (BUMNs) or BLU entities to execute international oil purchasing commitments.

‘For Russian oil imports, the mechanism must first be determined. Under Perpres No. 26 of 2026, imports can be handled directly by BUMNs such as Pertamina or by the BLU,’ Yuliot stated during a meeting at the DPR RI building in Jakarta.

Special regulations for Russian oil imports are deemed necessary due to differences in crude oil characteristics compared to supplies from the Middle East or the United States. The government aims to ensure aspects like quality, delivery timelines, location, and price fluctuations have strong legal foundations to avoid future regulatory issues.

‘There are differences in oil quality, delivery timing, location, and price volatility. These must be regulated under the Perpres to prevent legal problems later,’ he added.

The government continues to assess the effectiveness of the chosen import management instrument. ‘Both BUMNs and BLU are regulated,’ he concluded.

It is known that the special BLU setup is due to PT Pertamina (Persero) being bound by global bonds in oil trading. Thus, the government seeks an ideal scheme to prevent violations, such as using the BLU structure.

Previously, ESDM Directorate General for Oil and Gas Program Coordination Director Hendra Gunawan stated that discussions were held directly with Russian teams to discuss the implementation mechanism of the oil imports.

‘We had direct discussions with the Russian team to follow up on how it will be implemented, as it has been circulating in the media; they provided input on the implementation mechanism,’ Hendra said during a hearing with the XII Commission of the DPR RI.

He added that the government has prepared a draft Presidential Regulation regarding the designation of BLU as the scheme for implementing Russian oil imports. The regulation will be followed up with ministerial regulations (Permen) or ministerial decisions (Kepmen).

‘We have prepared the Perpres on BLU designation, and the follow-up mechanisms in Permen or Kepmen are still being discussed as there are no sanctions, so we have no legal business relationship – this is what we are pushing for,’ he said.

Regarding BLU readiness, Hendra noted the government has drafted follow-up regulations for the Perpres.