Digitalization in Oil and Gas: How AI and Automation Are Transforming the Industry

Image source : Suara.com/Ema RohimahThe recent hike in the price of fuel oil has left the public infuriated. On the same day when President Joko Widodo and the ministers held a press conference last September, the official fuel price increased by 30 percent. The hike—the first in eight years—raised the Pertalite's price from Rp. 7.650 to Rp. 10.000 per liter, diesel price from Rp. 5.150 to Rp. 6.800, and Pertamax from Rp 12.500 to Rp 14.500. This then begs a question, why did the price of gasoline rise?One thing we should know, anything that impacts crude oil will affect gasoline. The price of crude oil, however, always fluctuates.  One of the factors that can influence the recent price of crude oil is the supply and demand of crude oil.The principle of supply and demand is the same as what we’ve learned at school, when demand increases, oil prices rise (or supply decreases), and vice versa. For example, Brent crude oil, a type of crude oil, plummeted to $22.58 a barrel in March 2020, reaching its lowest level since 2002 due to the COVID-19 pandemic. That can happen because a lot of businesses closed, which caused the low demand for oil.Geopolitical events in any of the major oil-producing countries might also result in oil trade wars and affect oil prices. Oil prices can skyrocket as a result of conflict or crisis. This is because traders are concerned that it will limit the oil supply, causing prices to rise. The recent Russia-Ukraine conflict made oil prices top $100 per barrel for the first time since 2014 in February. What a number.In addition to crude oil, outside factors may also contribute to raising the price. Retail prices for fuel oil can be influenced by production costs and government regulations, too. The components of production costs that must be considered are the cost of crude oil, the cost of refining, the cost of distribution and marketing, and the cost of taxes. According to the Finance Ministry, Sri Mulyani, the economic price (crude oil price + production cost combined) for Pertalite is supposed to be Rp. 14.450 per liter while diesel is Rp. 13.950 per liter. Of course, the retail gasoline prices that we pay in SPBU are already subsidized by the government.Difference between subsidized prices at the pump and economic prices in Indonesia. Source: Investor Daily Source: U.S. Energy Information Administration, Gasoline and Diesel Fuel UpdateGovernment policy plays a vital role in ensuring that the price is reasonable for both the people and the country. According to President Joko Widodo, the energy subsidy had tripled this year from its original budget, triggered by rising global prices of oil and gas. So, rather than increasing the number of subsidies, the decision to raise fuel prices appears plausible for the time being. But why isn't the price of gasoline rising in neighboring countries like Malaysia?Well, despite having similarities in many aspects, the production and distribution of energy are structurally quite different due to factors like market size and domestic supply. Indonesia has not recently made significant profits because the domestic market has become the primary market, which is more political and economical to people than profit-driven. This presents a challenge because consumers are used to the days of cheap, plentiful oil, while Indonesia is producing less than it once did. Oil production and consumption in Indonesia Source: BP Statistical Review of World Energy, various yearsPertamina’s limited refinery capacity means that it has become ever more reliant on imports and thus more sensitive to swings in global energy prices. Contrarily, Malaysia has consistently generated profits and has managed to hold gasoline prices steady despite volatility in the world energy markets. It is difficult to compare the two countries since Malaysia has a much smaller domestic market than Indonesia.The rising of fuel prices is a really sensitive issue, any changes will have a significant impact on households and small businesses. Indonesia probably needs to allocate more spending toward human resources investment, like creating more jobs and improving education, in order to be resilient to the swings of global energy. It must do more than just raise the prices to benefit from its demographic transition.References: https://thediplomat.com/2022/09/why-the-price-of-petrol-increased-in-indonesia-but-not-in-malaysia/https://www.thebalancemoney.com/how-are-oil-prices-determined-3305650#:~:text=What%20affects%20the%20price%20of,supply%2C%20and%20expected%20global%20demand.https://www.investopedia.com/articles/investing/072515/top-factors-reports-affect-price-oil.asphttps://www.investopedia.com/articles/economics/08/determining-oil-prices.asp

Announced by Minister of Energy and Mineral Resources (ESDM) and Coordinating Minister for Downstream and Energy Transition Bahlil Lahadalia in Jakarta on Monday, October 26, the regulation replaces Pertamina’s long-standing Business-to-Business (B2B) competitive bidding process with Government-to-Government (G2G) and Government-to-Business (G2B) frameworks. Under the new architecture, the central government strikes bilateral supply agreements with producer nations, BLU Lemigas executes the import procurement, and Pertamina purchases the commodities domestically from Lemigas.th"All this time, Pertamina conducted B2B processes where tenders took a very long time, and even after winning a tender at a cheap price and reaching a deal, when another country offered to buy at a higher price, the supplier gave the cargo to the higher bidder," Bahlil said during a press conference at the Ministry of ESDM in Jakarta on Monday.1. End of Routine Direct B2B Tenders:2. Pertamina’s Redefined Role as Offtaker:3. Conditional Direct Import Exception:4. No-Tender and Price Differential Clauses: "We are committed to executing the government's mandate professionally and responsibly so that energy supplies for the public and industry remain secure," Simon said in an official written statement on Tuesday, October 27.From an international energy market perspective, Perpres No. 107/2026 presents a sharp trade-off between sovereign supply security and institutional governance. On the upside, state-backed G2G contracts give Indonesia stronger diplomatic leverage to secure long-term volumes and discounted barrels such as Russian crude oil, which Director General of Oil and Gas Laode Sulaeman confirmed is a focus of the revised regulation while shielding domestic supply from spot-market bidding wars. Perpres No. 107/2026 genuinely fortify Indonesia’s energy sovereignty, or will it create a new bureaucratic bottleneck in the country's fuel supply chain?

Indonesia is set to eliminate diesel imports in 2026, supported by the upcoming operation of the Refinery Development Master Plan (RDMP) Balikpapan, operated by PT Pertamina (Persero). Based on the latest update, the project is now scheduled to be inaugurated by President Prabowo Subianto on 17 December 2025, marking the entry of Indonesia’s largest refinery upgrade into commercial operation. Previously, Minister of Energy and Mineral Resources, Bahlil Lahadalia had stated that the RDMP Balikpapan inauguration was planned for 10 November 2025 following a limited cabinet meeting with President Prabowo on 3 November 2025. At the time, he emphasized that the refinery upgrade would enable Indonesia to meet domestic diesel demand entirely through national production. “Insya Allah, starting 2026 we will no longer import diesel,” Bahlil said. “Because our RDMP refinery in Balikpapan will be inaugurated.” Despite the rescheduled inauguration, the government maintains that RDMP Balikpapan will play a decisive role in strengthening fuel self-sufficiency. The facility is expected to significantly increase Indonesia’s refining capacity and support the national objective of achieving zero diesel imports while also boosting aviation fuel (avtur) supply for both domestic and export markets. The RDMP Balikpapan project is designed to modernize one of Indonesia’s strategic refineries by increasing production capacity, improving fuel quality, and enhancing operational efficiency. The refinery upgrade forms part of Pertamina's long-term downstream investment roadmap to reduce reliance on petroleum imports, strengthen supply resilience, and improve state fiscal performance by reducing the foreign exchange burden from imported fuels. In support of the refinery expansion, the government is also pushing for the implementation of B50 biodiesel, which blends 50% palm oil-based fuel. According to Bahlil, the synergy between RDMP Balikpapan and B50 could shift the domestic diesel balance from deficit to surplus. “If both RDMP and B50 run well, we will have excess diesel and we can export it,” he asserted. The ministry is currently calculating the production forecast and export potential once both programs are fully executed. To date, Indonesia has relied on imported diesel to bridge the gap between domestic refinery capacity and fuel consumption. The cessation of diesel imports is expected to reduce logistics vulnerability during global price fluctuations, strengthen energy independence, and improve the trade balance. Policymakers have highlighted that diesel remains a critical fuel for transportation, mining, agriculture, and industrial sectors, meaning its secure supply is closely tied to national economic performance. The RDMP Balikpapan project has been categorized as a strategic national program due to its magnitude and expected economic impact. The government anticipates that its operation will contribute to regional economic activity, promote industrial employment, and accelerate technology transfer in refinery modernization. Stakeholders, including local governments, logistics operators, and energy-intensive industries are monitoring the commissioning timeline as it will determine fuel distribution adjustments across Kalimantan and other regions. Further information regarding refinery output, the detailed implementation roadmap for B50, and mechanisms for potential diesel exports is expected to be released after the inauguration in November. For now, the government maintains the target of achieving diesel self-sufficiency in 2026, marking what could become a significant milestone in Indonesia’s long-term energy security agenda.Writer: Azzahra Luna Prasetyo

PT Pertamina Hulu Energi (PHE), Indonesia's state-owned upstream oil and gas subsidiary, recorded total oil production of 475,000 barrels per day (bopd) through April 2026, a significant drop from the 556,000 bopd achieved across 2025. The company's CEO, Awang Lazuardi, attributed the decline to a combination of domestic operational setbacks and geopolitical turbulence abroad, revealing the breadth of pressures bearing down on Indonesia's largest upstream operator.At home, the most disruptive incident occurred at Blok Rokan in Riau, PHE's single largest producing asset. Early in the year, a gas supply disruption arose after a pipeline integrity failure, specifically a leak in a transmission line operated by Transportasi Gas Indonesia (TGI). The outage lasted more than 20 days, severely curtailing the gas-powered energy supply to production facilities across the block. "Average oil production at Rokan dropped quite sharply," Awang said during a hearing with the House of Representatives' Commission XII in late May. Domestic output for the period stood at 367,000 bopd, down from 396,000 bopd in 2025.Further domestic pressure came from Lapangan Banyu Urip, a joint-operated asset with ExxonMobil. PHE encountered facility constraints that limited efforts to ramp up gas production at the field, compounding the output shortfall at a time when the company was already struggling to recover losses at Rokan.On the international front, PHE holds a participating interest in West Qurna-1, an oil field in southern Iraq. Due to force majeure caused by the conflict between the United States, Israel, and Iran, the Iraqi government ordered a temporary shutdown of the field. The move cost PHE approximately 100,000 bopd of production. Though operations have since been permitted to resume, output remains at less than ten percent of capacity, allocated solely to meet Iraq's domestic needs, and a full recovery timeline remains uncertain.Together, these disruptions have pushed PHE's total production well below the government's 2026 lifting target of 610,000 bopd set in the state budget. Awang acknowledged the scale of the challenge but pointed to the temporary nature of several setbacks. Industry observers, however, note that structural vulnerabilities including aging infrastructure, geopolitical exposure, and dependence on a small number of high-output blocks continue to pose long-term risks to Indonesia's energy security goals.Written by: Akhirian Taka