Jakarta Globe is reporting that the United States will support Indonesia in developing 17 modular oil refineries throughout the archipelago, as the country seeks to reduce its reliance on imported fuels, according to Coordinating Minister for Economic Affairs Airlangga Hartarto.
Citing unnamed sources, Reuters recently reported that Indonesia’s sovereign wealth fund Danantara will partner with Texas-based engineering firm KBR on the multi-billion-dollar project. The engineering, procurement, and construction (EPC) contract is estimated to be worth USD 8 billion. While Airlangga on Monday (28/7/25) confirmed both the EPC deal and Danantara’s involvement, he declined to say whether KBR, formerly Kellogg Brown & Root, was indeed the US firm in question.
“This is not about Indonesia investing in the US, it’s the other way around. We’re going to build 17 small-scale refineries across Indonesia,” Airlangga said during the Investor Daily Roundtable in Jakarta.
Later in the day, he told the Jakarta Globe that the refineries would be located across Sumatra, Kalimantan, Java, and eastern Indonesia. He estimated the country’s annual energy subsidy burden at USD 50 billion, including both direct and indirect costs. The high logistics expenses for fuel distribution have prompted the government to push for more domestic refining capacity.
“These subsidies are enormous. If we want to be energy self-sufficient, we must refine our own fuels locally. This partnership will involve Danantara and a US-based EPC firm,” he said.
Airlangga noted that the reported USD 8 billion figure stemmed from the cost of equipment procurement for the refinery projects.
Despite the incoming US investment, Indonesia is also making outbound investments in the American energy sector through the private sector, says Jakarta Globe. Purwakarta-based Indorama is preparing to invest USD 2 billion in a blue ammonia facility in Louisiana. The company has already secured approval from the state government, Airlangga said, adding that Indorama had requested consistent tax credits under the US Inflation Reduction Act (IRA) for the project.
Jakarta has factored in these investment initiatives as leverage in ongoing trade talks with Washington. During initial negotiations, US President Donald Trump had urged Indonesia to open manufacturing operations in the US, promising zero-percent tariffs in return.
Under the latest agreement, Trump has agreed to impose a reduced 19 percent tariff on Indonesian goods, down from the previously threatened 32 percent. As part of the deal, Indonesia has committed to purchasing USD 15 billion worth of American energy products, including crude oil, liquefied petroleum gas, and gasoline, to help balance bilateral trade.
Jakarta Globe reports that in related developments, Pertamina’s refining arm, Kilang Pertamina Indonesia (KPI), recently signed memoranda of understanding with US energy giants ExxonMobil and Chevron, as well as energy trading firm KDT Global Sources. According to Pertamina spokesperson Fadjar Djoko Santoso, the agreements aim to secure feedstock supplies and explore broader cooperation in downstream refinery investments.
Pertamina, like other state-owned enterprises, now operates under the umbrella of Danantara.
Source: Jakarta Globe
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