In a move aimed at reducing the trade surplus with the United States, Indonesian Energy Minister, Bahriel Lahadalia, stated that Indonesia would propose increasing its imports of US crude oil and liquefied petroleum gas (LPG) by approximately $10 billion as part of its ongoing tariff negotiations with Washington.
This step is designed to balance the trade deficit with the United States and avoid the imposition of harsh 32% tariffs on its exports.
Increasing US Imports to Strengthen Trade Relations
According to the minister’s statements, Indonesian delegations will head to Washington later today for official discussions regarding the proposed tariffs.
Indonesia plans to increase its imports of American goods by between $18 billion and $19 billion to address the trade imbalance and enhance economic cooperation between the two nations.
Plan to Boost US Oil and Gas Imports
The Indonesian Energy Ministry has recommended increasing imports of US oil and gas. This step is part of Indonesia’s broader energy strategy to reduce reliance on other traditional gas suppliers like Qatar and Saudi Arabia.
The country aims to reduce its LNG imports from Indonesia by approximately 20% to 30%, aligning with the US trade agreement's requirements.
Impact on Indonesia's Oil and Gas Market
According to data from Kepler, Indonesia imported about 217,000 barrels of LPG daily last year, with approximately 124,000 barrels coming from the United States. As for crude oil, the country imported about 306,000 barrels daily, largely relying on suppliers from Nigeria, Saudi Arabia, and Angola. These changes in import policies could significantly alter Indonesia’s energy market dynamics.
Pertamina’s Role in the Negotiations
A spokesman for Pertamina, Indonesia’s largest state-owned company for LPG distribution, stated that the company is currently reviewing its needs and awaiting instructions from the government regarding how to implement these adjustments to its imports, especially concerning reducing reliance on certain suppliers.
Prospects for Economic Cooperation Between Indonesia and the US
This initiative is expected to contribute to strengthening economic cooperation between Indonesia and the United States. The Indonesian government is eager to improve its trade relations with Washington amidst ongoing economic tensions.
The move underscores Indonesia’s desire to achieve a balanced trade relationship with the US by increasing its US energy imports, particularly in the oil and gas sectors.
