Indonesia’s strategic oil reserve alarm has been sounded. This is because Indonesia currently only has operational reserves for national consumption. The development of the Strategic Petroleum Reserve (SPR) infrastructure cannot be delayed as it enters an emergency phase. One of the vital functions of the strategic oil reserves is to maintain national energy stability.
As Indonesia approaches its 80th independence anniversary next month, the priority of building the Strategic Petroleum Reserve (SPR) has yet to be realized. The narrative of energy self-sufficiency is often a working program for every government cabinet, but the implementation has fallen short of expectations. Discussions on energy self-sufficiency are always on the agenda between the Government (Ministry of Energy and Mineral Resources) and the House of Representatives, but have not yielded any results, despite the emergency status of the strategic oil reserves.
The availability of crude oil as an instrument to stabilize the market and maintain national economic stability during energy crises has reached a worrying stage. Indonesia, as the country with the largest population in ASEAN and a strategically located geography, only has operational reserves for national consumption. This means Indonesia can only sustain itself for a few days at most in case of supply disruptions or issues.
Up to now, there is no legal mechanism or institution governing oil storage as national reserves. Currently, the strategic oil reserves are only operational and owned by commercial entities like Pertamina, which operates daily oil consumption of 1.6 million barrels, compared to Japan (90 days), India (45 days), and even South Korea (93 days).
Looking from an economic and fiscal perspective, the implications are significant. If geopolitical conflicts cause world oil prices to surge from US$80 to US$150 per barrel, Indonesia, which imports over 800 thousand barrels of oil per day, will face extraordinary pressure on the state budget. Fuel subsidy increases could reach IDR350 trillion in a year. This situation highlights the urgent need to start building a legal framework, institution, and infrastructure for storing strategic energy reserves.
