Indonesia energy security and import diversification

Indonesia is implementing various strategies to bolster its energy security and manage fiscal pressures related to fuel imports.

To maintain domestic energy security and meet national demand, the Indonesian government plans to continue importing crude oil from Russia. This decision persists despite potential risks of United States tariffs under the ‘Lindsey O. Graham Sanctioning Russia and Iran Act of 2026’, which allows for tariffs of up to 100% on major purchasers of Russian energy. The country is also facing fiscal strain as global crude oil prices exceed $105 per barrel, leading to a 52.1% year-on-year increase in energy subsidies and compensation.

In a separate effort to diversify supply and mitigate geopolitical risks in the Persian Gulf, Indonesia has secured a $15 billion long-term Liquefied Petroleum Gas (LPG) import contract with the United States. This move shifts reliance away from the Middle East toward the U.S. and Australia. Alongside these procurement efforts, the government has introduced stricter oversight for LPG distribution, reclassifying the business activity as ‘Medium-High Risk’ to ensure legal certainty and prevent commodity misuse.