Russia Interested in Investing in Oil Refinery and Storage

The Indonesian government is accelerating the diversification of energy supplies while promoting the development of strategic oil and gas infrastructure amid rising global energy supply disruption risks. In response to these needs, efforts to explore strategic partnerships have yielded results. Russia has expressed interest in constructing an oil refinery and storage facilities as part of efforts to strengthen long-term national energy resilience and reduce reliance on imported fuel oil (BBM). Energy and Mineral Resources Minister Bahlil Lahadalia stated that this commitment follows up on the meeting between President Prabowo Subianto and Russian President Vladimir Putin. “Yes, as I mentioned at the palace yesterday, on the President’s instructions, I was asked to follow up on the meeting between the two leaders, President Prabowo and President Putin, and in my meeting with the Russian Minister of Energy and Government, it was agreed that we will receive support from Russia,” Bahlil said. Currently, national BBM consumption reaches around 1.6 million barrels per day or equivalent to 39-40 million kilolitres (KL) per year. Meanwhile, domestic oil production is only about 600,000 barrels per day, so Indonesia still imports around 1 million barrels per day. To reduce imports, the government is relying on increasing refinery capacity through the Balikpapan Refinery Development Master Plan (RDMP) project and the implementation of mandatory 50 per cent biodiesel from palm oil feedstock (B50) starting July 2026. “Now, for petrol, we import it; our total consumption is nearly 39-40 million KL. From that, our domestic production before the Balikpapan RDMP was 14.3 million KL. The addition from the Balikpapan RDMP is 5.6-5.7 million KL, so almost 20 million kilolitres, meaning our imports will drop to 50 per cent,” Bahlil explained. Regarding the Russian investment plan, the government is still refining the cooperation scheme to be carried out through government-to-government (G2G) or business-to-business (B2B) mechanisms. “That was one of the points we discussed yesterday; indeed, there are several of their investments ready to enter, but finalisation awaits one or two more rounds with us, specifically regarding the refinery and storage. We will announce it later,” Bahlil said. Bahlil emphasised that the project plan differs from the development of the Tuban Refinery, which is a collaboration between PT Pertamina and the Russian company Rosneft Oil Company. The scale of the currently explored project is said not to be as large as the Tuban Refinery. The construction of the refinery and storage facilities is considered crucial for increasing energy reserve capacity, strengthening supply flexibility, and mitigating the impact of global energy market volatility on domestic supply and prices. Furthermore, operations at the Cilacap Refinery continue relentlessly. Behind the flare stack that marks the pulse of the national energy industry, workers ensure that fuel oil (BBM) supplies remain maintained to meet public needs. This readiness is supported, among others, by the operational innovation of Block Mode, which has been implemented since May 2024. This innovation allows the Cilacap Refinery to process crude oil mixtures more flexibly and efficiently in Cilacap Refinery I, which previously relied only on crude oil from the Middle East. Manager of Refinery Business & Optimisation at Cilacap Refinery, Endah Purbarani, explained that as Indonesia’s largest refinery, Cilacap Refinery continues to make various breakthroughs to maximise facilities that have been operating for decades. “Block Mode is the result of collaboration from the Cilacap Refinery team, fully supported by the head office. This innovation enables the processing of crude mixes, thereby increasing the yield of high-value products while strengthening refinery performance,” Endah said. Through Block Mode innovation and crude cocktail processing, Cilacap Refinery can maintain production reliability while ensuring energy stocks remain secure during periods of increased consumption. Operations no longer rely solely on processing crude oil from the Middle East but also various types of crude oil with similar characteristics. It is known that crude cocktail is the result of blending several oils to improve operational efficiency and flexibility.