Indonesia’s pursuit of energy security is drawing it deeper into competing Russian, American and European spheres of influence. The challenge is no longer simply securing oil and electricity, but preserving the freedom to make long-term energy choices on Indonesia’s own terms.
In ten weeks, Indonesia received its first cargo of Russian crude oil, watched its own port land on the European Union’s sanctions list, and was courted by two nuclear powers offering competing versions of our electricity supply for the next sixty years. Whilst seemingly separate on the surface, these events are anything but.
Ten Weeks, Three Engagements, One Pattern of Competition
On June 29, the tanker Sierra discharged some 770,000 barrels of crude oil at Balikpapan. The cargo, worth around US$75 million, had loaded at Kozmino, the terminal outside Vladivostok, Russia’s largest port in the Pacific, that has become Russia’s primary window into Asian energy markets. It was the first delivery under a government-to-government arrangement for up to 150 million barrels, agreed when President Prabowo Subianto visited Moscow in April.
Six weeks earlier, on May 12, the director general of Russia’s state-owned atomic energy corporation, Rosatom, met the Indonesian President in Jakarta and offered an integrated nuclear pathway; which includes the development of floating power units(a design well-suited for an archipelago), small modular reactors and gigawatt-scale plants, along with regular training and regulatory support . Six weeks after this meeting, between June 22 and 24, the United States Mission in Jakarta brought a civil-nuclear expert for a tour to the Bandung Institute of Technology, the National Research and Innovation Agency, a roundtable with the National Energy Council and finally a public panel at @america, under a programme it calls ‘Freedom 250: American Leadership in Energy Security’.
Read separately, these are three ordinary transactions in an energy-hungry country. Read together, however, these events are a single competition, where Indonesia is not the player but rather the playground.
The Risks of an Oil Deal Made During Crisis
Start with the oil, because it is the easiest to defend. We Indonesia consumes roughly 1.6 million barrels a day and produces well under half of that: average lifting to 31 July was 578,156 barrels per day, below the budget target of 610,000. The closure of the Strait of Hormuz removed almost overnight the Middle Eastern supply on which about a fifth of Indonesia’s fuel imports depended. Pump prices rose. People protested. Russian ESPO-grade crude oil – a higher quality, light oil efficient for refineries – is cheaper and compatible with Indonesian refineries. Energy Minister Bahlil Lahadalia’s position, that the state must keep the country supplied, and that others should not interfere in Indonesia’s sovereignty, is not unreasonable.. Using foreign policy to secure discounted crude oil during an acute supply shock is what foreign policy is for, however, the precarity of a government that cannot keep fuel in the pumps means there is little political room left for anything else.
Looking at how the deal was structured, the imports are being managed not by Pertamina, Indonesia’s state-owned integrated energy corporation, but by Lemigas, the government’s official oil and gas research centre. Pertamina had signalled reluctance, worried about how the transaction would read to investors and what it might do to its global bonds.
The Director General of Oil and Gas has said on the record “Pertamina operates using global bonds.” The import scheme had to be built around that constraint. Pertamina’s dollar-denominated global bonds, issued in the United States, carry covenants committing the company to avoid in illicit oil transactions, which extend to Russian crude bought outside the sanctions regime. A breach risks accelerated repayment claims, wider spreads on outstanding paper, fresh due diligence from correspondent banks and insurers, and a higher cost of capital across the company’s whole project book, not just this cargo.
The state, in short, has built a firewall between the purchase and its own energy champion, which means it understood the risk perfectly well. That is not a criticism. It is a fact worth sitting with: Indonesia now manages sanctions exposure as a routine feature of energy policy.
Pertamina’s concerns were confirmed on April 23, when the European Union’s twentieth sanctions package listed the Karimun Oil Terminal, on Indonesian soil, as the first third-country port ever designated under its Russia framework. Brussels stopped short of accusing Indonesia of anything because it did not have to. Indonesian infrastructure now sits inside somebody else’s enforcement perimeter, and the exposure risks fall not on the government but on the Indonesian banks, insurers, shipping agents and port operators who must explain themselves to correspondent institutions abroad.
Oil, however, is the reversible part of this story. A cargo can be diverted. A supplier can be swapped. A reactor cannot.
A More Pressing, Nuclear Question: Committing to the Infrastructure
This is why the nuclear question deserves more scrutiny than it is getting. Indonesia’s electricity plans envisage nuclear generation from the early 2030s, beginning at around 500 megawatts and scaling far higher by mid-century. Notably, Russia is not merely bidding to build a plant. It is offering the whole lifecycle, construction, fuel, spare parts, operator training, university partnerships, and, through joint workshops with the Nuclear Energy Regulatory Agency, help in designing the rules under which floating nuclear plants would be licensed in Indonesia.
That last item is perhaps one of the more critical points to watch out for. A vendor that assists in writing a regulatory framework has shaped the market before the tender opens. This is not a Russian peculiarity; every nuclear exporter does it, and Washington’s June programme was aimed at precisely the same objective. The Americans did not try to outbid Moscow on price or state financing, where they would ultimately lose to a vendor whose government can absorb the cost;Rosatom’s packages are underwritten by the Russian state, which can extend sovereign credit, defer repayment and bundle construction, fuel and operations on terms no shareholder-owned consortium can match. So, they went to Indonesia’s engineers, its researchers, regulators, energy council and interested public, because that is how a sixty-year technology decision is actually made, through years of experience and expertise upstream of any signature.
Both powers have correctly identified that Indonesia’s nuclear future will be settled in seminar rooms rather than in a procurement office. It is not obvious that Indonesia have identified this itself.
None of this argues for refusing Russian oil or excluding Rosatom. An archipelago of 280 million people has every reason to hear the offer: coal still supplies close to two-thirds of its electricity, wind and solar together under 1 percent, and the current supply plan adds a further 16.6 gigawatts of coal and gas against a net zero commitment for 2060. Phasing coal down without importing a reliability crisis needs firm, low-carbon baseload, and the technologies that provide it are new. Nor does it argue for reflexively preferring an American, French, South Korean or Chinese vendor. The problem is not which partner. It is that Indonesia is making sixty-year commitments using a doctrine, bebas-aktif or the ‘free and active’ policy, that it invokes as a conclusion rather than applies as a method.
Reaffirming the ‘Free and Active’ Policy and Establishing Stated Grounds
The free and active foreign policy was never meant to mean taking something from everyone and explaining nothing to anyone. It was meant to mean that Indonesia decides, on stated grounds, in its own interest. Stated grounds are the missing element in these recent energy deals. When non-alignment is expressed only as refusal to explain, Moscow reads it as sympathy, Brussels reads it as drift, and Washington reads it as an opening, and all three then narrate our choices for us, to their own publics, in terms we did not choose.
The fix is unglamorous; however, it’s entirely within Indonesia’s power, the government needs to publish the criteria. Before the next energy agreement, the government should state what it requires of any strategic partner, including sovereignty over operational decision-making; genuine technology transfer and workforce development; no exclusivity clauses and no single-vendor lock-in on nuclear fuel; a regulator whose independence from all vendors is demonstrable and a full disclosure of sanctions and counterparty risk to the firms that will bear it. Then apply those criteria to Rosatom, to Washington’s offer and to whoever comes next, visibly and identically.
Indonesia is not obliged to take a side in other people’s wars. It is obliged, however, to be the author of its own decisions. Buying oil where it is cheapest is sensible, but hosting a nuclear industry we did not design, under rules we did not write, in a supply chain we cannot leave, would not be energy security. It would be dependency dressed up as foreign altruism.
Reynaldo de Archellie is an Assistant Professor in the Department of Area Studies at Universitas Indonesia, where he specialises in Russian Studies and contemporary Indonesia–Russia relations. His research explores Russian soft power in East Asia, historical memory and nationalism, as well as Indonesian democratisation, local politics and China’s influence in the region. He is also a Ph.D. candidate in History at Universitas Indonesia.
This article is published under a Creative Commons License and may be republished with attribution.
