Bahlil Says LPG Subsidies Near Rp100 Trillion Amid Rising Oil Prices

Karawang: Energy and Mineral Resources Minister Bahlil Lahadalia said Indonesia’s liquefied petroleum gas (LPG) subsidies could reach nearly Rp100 trillion when the average Indonesian Crude Price (ICP) stands at USD90–100 per barrel, amid geopolitical turmoil affecting global energy markets.

Bahlil explained that when the Indonesian Crude Price (ICP) stood at USD70 per barrel, LPG subsidies amounted to Rp87 trillion. However, rising crude oil prices have pushed the subsidy burden to nearly Rp100 trillion.

“When the ICP was still at USD70 per barrel, our subsidies amounted to Rp87 trillion. But now that the average ICP has reached USD90 to USD100 per barrel, our subsidies are approaching Rp100 trillion,” Bahlil said during the inauguration of the Cilamaya LPG Refinery in Karawang, West Java, as quoted by Antara on Friday, October 16, 2026.

According to Bahlil, geopolitical uncertainty, including conflicts in the Middle East and the Russia-Ukraine war, has affected global energy supply stability and prices. These conditions pose challenges for the government in maintaining national energy security.

“Almost every country in the world is now thinking about how to secure its energy sector from within its own borders. This is our challenge,” Bahlil claimed.

Government Prepares CNG as an Alternative to LPG

To reduce dependence on LPG imports, the government is preparing compressed natural gas (CNG) as an alternative energy source.

Bahlil said CNG is not a new energy technology in Indonesia. Several business sectors, including restaurants and hotels, have already used it in their operations.

He said CNG could be 30–40 percent cheaper than LPG. According to Bahlil, the gas used as feedstock is available domestically, meaning its utilization could support efforts to substitute imports.

“CNG is 30 to 40 percent cheaper. It uses C1 and C2 gas, which are abundant in our country,” Bahlil explained.

However, the government still needs to ensure that the technology is ready and the cylinders are safe before CNG can be used more widely by the public. One of the stages currently being tested is the use of 3-kilogram cylinders.

“This is part of our strategy to develop import substitutes. However, the 3-kilogram cylinders are still being tested, while the 12-kilogram cylinders are already in use,” Bahlil said.

The development of CNG is expected to expand Indonesia’s domestic energy options. However, its adoption for household use will still depend on cylinder testing results, safety considerations, infrastructure readiness, and economic feasibility.

September 2026 ICP Rises to USD112.81 per Barrel

Indonesia’s Ministry of Energy and Mineral Resources has set the average Indonesian Crude Price (ICP) for September 2026 at USD112.81 per barrel, up USD23.38 from USD89.43 per barrel in August 2026.

The figure was stipulated in Minister of Energy and Mineral Resources Decree No. 395.K/MG.03/MEM.M/2026 on Indonesia’s Crude Oil Prices for September 2026.

The ministry’s Director General of Oil and Gas, Laode Sulaeman, said the increase reflected global oil market dynamics driven by geopolitical uncertainty and a heightened risk of supply disruptions.

“The average ICP for September 2026 surged to USD112.81 per barrel, reflecting global oil market dynamics shaped by high geopolitical uncertainty and an increased risk of supply disruptions. The increase was recorded across all international benchmarks,” Laode said.

He explained that escalating military conflicts and diplomatic deadlock in the Middle East, particularly tensions involving the United States and Iran, had heightened security risks for shipping through the Strait of Hormuz, a key route for global oil trade.

In addition, delays to OPEC+ production quotas and attacks on oil refinery and export terminal infrastructure in Russia and the Red Sea region had further tightened global crude oil supplies.

Rising oil prices are among the factors the government must consider in managing energy subsidies. Amid these conditions, the government is promoting the use of domestic energy sources, including compressed natural gas (CNG), as part of efforts to reduce dependence on LPG imports.


(Razaqa Hariz)