As global oil prices soar above $100 a barrel, Indonesia is ramping up its efforts to enhance domestic oil exploration and production. This move comes in response to the country’s current output falling short of government targets, with production averaging around 578,000 barrels per day between January and July 2026, well below the goal of over 1 million barrels per day.
Deputy Energy and Mineral Resources Minister Yuliot Tanjung emphasized the urgency of developing local oil resources to mitigate Indonesia’s heavy reliance on imports. The nation has seen a significant increase in oil and gas import costs, which amounted to $25.77 billion in the first seven months of 2026—a more than 40% increase compared to the same period in the previous year. This surge is largely attributed to higher crude oil and petroleum product imports.
Indonesia is looking to harness the potential of several domestic oil fields, some of which have the capacity to produce between 2,500 and 3,000 barrels per day. To stimulate investment in these projects, the government is planning to accelerate exploration and production activities in 2027 and 2028. Incentives will be offered to both state-owned and private companies to encourage their participation in developing new oil projects.
Despite the rising costs on the global market, Indonesia intends to maintain current subsidized fuel prices through the end of 2026. However, prices for nonsubsidized fuel will continue to reflect market fluctuations. This policy aims to balance domestic economic stability while addressing the challenges posed by increased dependency on oil imports.