Indonesia is looking beyond Singapore for petrol supplies as it seeks to reduce its dependence on a single source, but analysts say diversifying imports will do little to address the country’s fuel production shortfall without faster refinery modernisation and investment in alternative fuels.

Indonesia has long sourced petroleum products from Singapore, including RON 90 petrol, which has a minimum octane rating of 90 and is marketed domestically as Pertalite. Singapore’s geographic proximity, advanced blending facilities and extensive storage capacity have made it a key supplier to Indonesia.

Jakarta is now trying to diversify away from Singapore and is looking for alternative suppliers such as China and India, according to Minister of Energy and Mineral Resources Bahlil Lahadalia.

“We know that we import RON 90 fuel from a neighbouring country, so starting tomorrow I will be leaving for several countries, including India, China and other countries, to get certainty about supplies,” Bahlil told reporters on Monday. The ministry has yet to provide an update on Bahlil’s trips. It did not immediately respond to requests for comment.

According to Bahlil, the government does not want to “rely on a single source of supply”, considering that nearly 60 per cent of Indonesia’s fuel imports currently come from Singapore.

Data from statistics agency BPS showed that 28.36 per cent of Indonesia’s oil and gas imports in the first half of this year came from Singapore.

Bahlil said the shift to China and India was also a precaution in case Singapore retaliated against Jakarta’s decision to cut natural gas exports to the city state by 31 million standard cubic feet per day. Indonesia currently supplies gas to Singapore with a total volume of 409.5 MMSCFD.

“Before we take any step, it is impossible not to consider or take everything into account,” he said.

Bahlil revealed on October 23 that the subsidised Pertalite reserves covered consumption for just 18 days, while reserves for the non-subsidised fuel stood at over 20 days.

The move to seek alternative partnerships highlights Indonesia’s fuel production gaps, as its refining capability cannot keep up with growing domestic demand.

Indonesia’s current refinery capacity sits at about 1 million barrels per day, but daily domestic consumption requires 1.6 million barrels, according to Fabby Tumiwa, executive director of the Institute for Essential Services Reform. Singapore offset the gap by up to 400,000 barrels per day, he said.

“Singapore’s fuel production is well-suited to our fuel needs. We also know that Singapore is a regional refining and trading hub. The trading ecosystem there is very liquid, making it easy to buy fuel on the spot or long-term market,” Fabby told This Week in Asia.

“From an energy security perspective, relying on a single source with large volumes is unsafe. We must diversify, both the products and sources.”Fabby said “not all refineries in Indonesia operate continuously”, while some new refinery projects planned by state-owned oil and gas company Pertamina “simply cannot proceed due to lack of financing or investors”.

The United States’ Energy Information Administration estimated the average utilisation rate of eight Indonesian refineries in 2024 at 79 per cent, the latest data available.

“It’s not that Indonesia lacks refineries. The question is whether the capacity and configuration of the available refineries can produce the type and volume of petrol the public needs,” said Iwa Garniwa, rector of the PLN Institute of Technology in Jakarta.

During former president Joko Widodo’s first term, Indonesia announced seven new refinery projects to boost domestic fuel production; only one, the massive refinery upgrade project in Balikpapan, has materialised.

Bahlil said last week the Balikpapan refinery, which cost Jakarta US$7.4 billion to build, would meet up to a quarter of domestic fuel demand.

Muhammad Baron, Pertamina’s vice-president of corporate communication, said in a statement to This Week in Asia that the Balikpapan refinery underlined the government’s efforts to “reduce dependence on fuel imports by increasing refinery capacity and optimising domestic resources”.

“[The Balikpapan refinery] increases crude oil processing capacity and refinery capabilities to process residues into higher-value products, producing Euro V-quality fuel,” Muhammad said.

Euro V petrol indicates a cleaner fuel standard that limits emissions of sulphur, carbon monoxide and particulate matter.

Iwa said the future of other refinery projects depended on “significant capital investment”, whether foreign or domestic.

“Investors need to take into account crude oil prices, processing margins, exchange rates, domestic fuel prices and the risk of policy changes. If the project’s economics are unattractive or the risk allocation is unclear, investors may delay their investment decision,” Iwa said.

He pointed to the long-delayed construction of the New Grass Root Refinery in Tuban, East Java, a joint project between Kilang Pertamina Internasional and Russian oil giant Rosneft. The project, expected to process up to 300,000 barrels of crude per day, has languished in the planning stage since 2015.

“The Tuban project’s experience demonstrates that changing geopolitical conditions and partner issues can affect project timelines,” Iwa said.

For now, the government could meet the rising Pertalite demand by sourcing it from countries such as South Korea, Japan, Malaysia, Thailand and the United Arab Emirates, Iwa said.

Aside from building new refineries, Muhammad said Pertamina “continues to increase domestic oil production, optimise its use as a raw material for refineries, and increase processing efficiency and reliability”.

Pertamina was also developing a domestic bioethanol supply as a petrol blending component to support the government’s implementation of the B50 biofuel programme, he added. The B50 blend consists of 50 per cent crude palm oil and 50 per cent fossil diesel.

As Indonesia aims for fuel self-sufficiency by 2028, Fabby urged the government to begin cultivating more bioethanol-producing crops such as sugar cane, sorghum and corn.

“If we work hard, E10 might be achievable by 2028,” Fabby said, referring to a fuel blend of up to 10 per cent renewable bioethanol and 90 per cent fossil fuel.

“However, targeting E50 by 2028 will be quite difficult, as it requires a surge in bioethanol production, vast areas of land and [considerable] time since crops cannot grow overnight.”