Indonesia has provided a much-needed boost to its energy sector through the inauguration of the nation’s $7.4 billion Balikpapan refinery. The global energy market has seen tremendous growth as the world enters a new era of increased demand for energy. 2025 saw the annual demand for energy increase to reach astonishing levels, and now, Indonesia is opening the door to a surge of new potential across its energy market.
Indonesia’s President was among the dignitaries at the recent inauguration ceremony
At a star-studded event in Jakarta, Indonesia’s President, Prabowo Subianto, inaugurated the upgraded Balikpapan refinery. The refinery has become of extreme importance to the nation as it aims to meet the anticipated increase in energy demand. Indonesia has mostly relied on imports of essential fuel resources, but now, thanks to the new upgraded refinery, the nation can develop a new sense of energy independence.
The country’s state-owned energy company, Kilang Pertamina Internasional, has been leading the upgrade efforts at the nation’s largest refinery to strengthen the country’s energy independence and reduce the reliance on imports of fuel and LPG.
The new upgraded Balikpapan refinery will now feature a processing unit for petrochemicals, which Pertimina notes will produce 5.8 billion litres of gasoline annually. This has become of national importance as the nation regularly imports vast amounts of essential fuel resources. The upgraded refinery could drastically reduce imports from 24 billion to 19 billion litres.
The Indonesian government has placed energy security at the top of its long list of priorities
The nation’s President has stated that energy security is his administration’s top priority, with the Energy Minister Bahlil Lahadalia noting that the upgrades would enable the refinery to increase production levels of 92-octane, 95-octane, and 98-octane gasoline.
“So we will no longer import. In 2027, God willing, we no longer import jet fuel, only importing crude oil.” – Indonesian Energy Minister Bahlil Lahadalia
The upgraded refinery will feature some pioneering and innovative processing capabilities
As petrochemical production becomes the latest trend to sweep across the international market, several nations have outlined plans to upgrade refineries or, in some instances, build entirely new ones to handle increased petrochemical production. Indonesia’s largest refinery will now feature several upgrades that enable large-scale petrochemical production.
Among the new upgrades are the following:
- a newly operational residual fluid catalytic cracking complex that will convert residual oil into petrochemicals and other fuel types.
- a new petrochemicals unit with a capacity of 283,000 tonnes annually
- a new processing unit that will increase LPG output from 48,000 to 384,000 tonnes
- Euro V-standard processing units
Indonesia has seen a turnaround in its upstream oil output in recent years, with official statistics from the government noting that 2024 saw 580,000 bpd. Pertamina has stated that the new upgraded petrochemical units could reduce LPG imports by as much as 4.9%. New opportunities for petrochemical growth across the Asian market have emerged in 2026, and Indonesia is aiming to lead the charge into a new year loaded with potential.
“As Asia’s rising powers seek to sustain growth and ensure stability, energy security has moved to the forefront of Asian geopolitics.” – Sanjaya Baru
The world has opened the door to a new surge in petrochemical production
With the expected increase in demand for petrochemicals becoming a real possibility, the overarching consensus by the global market is that more petrochemical production will be needed to meet demand for fuels this year.
With the EU launching the PRC Europe 2026 forum to advance the petrochemical sector and fast-track partnerships across the continent, the Asian market is set to welcome a surge in petrochemical production from Indonesia. The only thing standing in the path of Indonesia and its new upgraded refinery is competition from other Asian nations.
