Indonesia Expands Energy Imports from the United States, Displacing Other Suppliers
Jakarta – The Indonesian government will import energy commodities worth US$15 billion from the United States, a move that will inevitably reshape Indonesia’s energy import profile.
Several traditional supplier countries, including those in Southeast Asia, the Middle East, and Africa, are expected to experience a reduction in export volumes to Indonesia.
Energy and Mineral Resources Minister Bahlil Lahadalia emphasised that purchasing energy from the United States will not increase Indonesia’s overall import volume. Rather, the government is merely redirecting a portion of its supply sources from other nations.
“We are shifting part of our import volume from several countries, including those from Southeast Asia, the Middle East, and some countries in Africa,” Bahlil stated during a virtual press conference.
Bahlil further explained that in practice, the purchasing scheme will continue to consider mutually beneficial economic mechanisms. He stressed that the transaction must benefit both the United States and Indonesia.
Bahlil acknowledged that Indonesia’s current LPG imports are substantial, approximately seven million tonnes annually. Some of this LPG supply has already originated from the United States, but volumes will be increased going forward.
“Once we received direction from President Prabowo, and once the ninety-day period is complete, we will immediately begin the execution phase. This allows us to proceed without any misunderstanding from our partners,” Bahlil said.
According to the U.S. Trade Representative Office (USTR) documents, of the US$15 billion energy import agreement, petrol represents the largest component at US$7 billion. Crude oil imports account for US$4.5 billion, whilst LPG imports amount to US$3.5 billion.
The agreement concerning the purchase or import of energy commodities from the United States is contained in Annex IV, specifically under the industrial goods section. Point 2 of the industrial goods provisions stipulates that Indonesia must support and facilitate commercial arrangements to import energy commodities from the United States worth US$15 billion, consisting of:
Increasing imports of U.S. metallurgical coal to support steel production, local industrialisation, and energy reliability and security, whilst reducing dependence on imports from market-manipulating actors;
Increasing imports of advanced U.S. coal technology and partnering to accelerate the development, implementation, and commercialisation of such technology, including utilising all available financing mechanisms to support coal technology advancement, such as using coal and coal by-products to produce building materials, battery materials, carbon fibre, synthetic graphite, and printing materials, as well as fuel for power generation and other industrial processes;
Supporting and facilitating the purchase of LPG worth US$3.5 billion;
Supporting and facilitating the purchase of crude oil worth US$4.5 billion;
Supporting and facilitating the purchase of petrol products worth US$7 billion.