Indonesia is ramping up its oil exploration and production efforts in response to rising global crude prices, which have exceeded $100 per barrel. The country’s production, currently averaging around 578,000 barrels per day from January to July 2026, falls short of the government’s target of producing over 1 million barrels per day. This shortfall has underscored the need to bolster domestic oil resources, according to Deputy Energy and Mineral Resources Minister Yuliot Tanjung.
To address this gap and reduce dependency on imports, Indonesia plans to accelerate exploration and production activities over the next two years. The government is considering providing incentives to both state-owned and private companies to encourage investment in new oil projects. Several domestic oil fields have the potential to boost output, with some capable of producing between 2,500 and 3,000 barrels per day.
The push for increased domestic oil production comes as Indonesia faces rising costs for oil and gas imports, which reached $25.77 billion in the first seven months of 2026. This marks an increase of more than 40% compared to the same period the previous year, driven largely by higher imports of crude oil and petroleum products.
Despite the escalating global prices, the Indonesian government has decided to maintain subsidized fuel prices through the end of 2026. In contrast, nonsubsidized fuel prices will continue to align with market conditions, potentially reflecting the volatility in global oil prices.
