Antara News·Indonesia·Tuesday, October 13, 2026 at 02:47 AM UTC

Govt pushes community oil wells, ethanol for energy security

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Putu Indah Savitri, Yashinta Difa

Jakarta (ANTARA) - Coordinating Minister for Downstreaming and Energy Transition Bahlil Lahadalia is boosting public participation in the energy and mineral resources sector by legalizing thousands of community-managed oil wells and accelerating domestic ethanol production.

"Some of the community-managed wells for which we have granted permits are already in production,” Bahlil stated during the 3rd National Working Meeting of the Association of Indigenous Indonesian Entrepreneurs (HIPPI) in Jakarta on Monday (October 12).

“This is happening in Sumatra and Java. Just recently, I signed off on permits for Aceh as well," the minister added.

The policy provides formal opportunities for the public to participate in managing approximately 45,000 community-managed oil wells - many of which have been operated by residents for generations without official regulatory permits.

Under the legalized scheme, oil produced from community wells is purchased directly by state energy firm Pertamina at a price equivalent to 80 percent of the Indonesian Crude Price (ICP).

Bahlil, who also serves as Energy and Mineral Resources (ESDM) Minister, noted that legalizing these wells offers a dual benefit, ensuring business security for local operators while securing additional production to boost national lifting volumes.

Beyond upstream oil lifting, the government is preparing measures to curb gasoline imports through an ethanol blending program.

Currently, national gasoline demand stands at around 40 million kiloliters per year, whereas domestic refinery production is only about 18–19 million kiloliters.

Bahlil emphasized that the ethanol mandate would be implemented in stages, eventually reaching an E50 blend, with plans leading up to 2028 currently being finalized to align with domestic industrial capacity.

"We must avoid a situation where we enforce a mandate but end up importing the ethanol itself. That is not acceptable," he asserted.

Raw material supply chains for ethanol have been identified across Java, Sumatra and Papua.

The E20 phase alone requires approximately 8 million kiloliters of ethanol derived from cassava, sugarcane and corn.

Land requirements are estimated at 1 million hectares for cassava, 1.1 million hectares for sugarcane and 1 million hectares for corn - utilizing Other Use Areas (APL) and abandoned Business Use Rights (HGU) lands under an integrated management approach.

Additionally, the government is developing alternative feedstocks, including a sweet sorghum pilot project in Yogyakarta and East Nusa Tenggara, and a sugar palm processing facility in Kamojang operating at a capacity of 1,000 liters per day.

This initiative follows the successful rollout of the B50 biodiesel mandate implemented on July 9, 2026, which saved approximately Rp170 trillion (approximately US$9.5 billion) in foreign exchange and created jobs for 2.1 million people.

By involving local communities in oil well management and expanding domestic biofuel feedstocks, the government aims to boost national energy self-sufficiency while creating broader economic opportunities in the regions.

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