Indonesia Plans to Build Mega Oil Refinery with 1 Million BOPD Capacity

Main Takeaways

● Indonesia revised its refinery plan, increasing capacity to 1 million bopd from the previous 500,000 bopd to accelerate industrial downstreaming. ● The government will also develop 1 million bopd storage facilities and promote alternative fuels such as dimethyl ether (DME) as an LPG substitute. ● BPI Danantara may finance these projects, but only if they pass feasibility evaluations, while Indonesia remains open to private and foreign investment. ● The initiatives align with Indonesia’s net zero emission (NZE) target by 2060, ensuring long-term sustainability alongside economic growth.

JAKARTA, investortrust.id – The Indonesian government has revised its plan for a new oil refinery, now targeting a capacity of 1 million barrels of oil per day (bopd)—double the previously planned 500,000 BOPD. This expansion is part of the government’s strategy to accelerate industrial downstreaming and enhance energy security through large-scale infrastructure development.

Minister of Energy and Mineral Resources Bahlil Lahadalia stated that in addition to the refinery, supporting facilities such as storage infrastructure and alternative fuel production will also be developed.

“We are planning to build a refinery with a capacity of around 1 million barrels per day, and it will be distributed across multiple locations, including Kalimantan, Java, Sulawesi, and Maluku-Papua, to ensure equitable development,” Bahlil said after attending a limited cabinet meeting led by President Prabowo Subianto at the Merdeka Palace in Jakarta on Monday, March 10, 2025.

Expanding Energy Infrastructure and Downstream Sectors

Beyond refinery development, the government also plans to construct oil storage facilities with the same 1 million bopd capacity. Additionally, Indonesia is promoting dimethyl ether (DME) production as a substitute for liquefied petroleum gas (LPG) and expanding downstream industries in the fisheries, plantation, and forestry sectors.

“For the coal mineral sector, aside from bauxite, we are also focusing on nickel and tin. Moreover, we will develop solar panels and process quartz sand into critical minerals, leveraging Indonesia’s natural comparative advantages,” Bahlil added.

Investment and Project Funding

Minister of Investment and Head of the Investment Coordinating Board (BKPM), Rosan Roeslani, emphasized that the government remains committed to attracting investments for downstream projects. He noted that Badan Pengelola Investasi Daya Anagata Nusantara (BPI Danantara), Indonesia’s new sovereign wealth fund, may finance these projects, but only those that meet strict feasibility assessments.

“Danantara will only fund well-prepared projects. We are also open to foreign and domestic investors for viable projects. Our evaluation will be independent, considering return on investment, economic benefits, reduction in energy imports, and job creation,” Rosan explained.

Aligning with Indonesia’s Net Zero Emission Goals

The refinery and downstream projects are also designed to align with Indonesia’s net zero emission (NZE) target by 2060.

“These initiatives will support industrialization while ensuring that emissions are kept under control, making them economically viable and environmentally sustainable,” Rosan concluded.