Presidential Regulation Number 26 of 2026 Establishes the Mechanism for National Energy Procurement, Imports, and Reserves

Introduction

On April 30, 2026, the President issued Presidential Regulation Number 26 of 2026 on the Procurement of Crude Oil, Fuel Oil, and/or Liquefied Petroleum Gas for National Energy Security ("Presidential Regulation 26/2026"). Presidential Regulation 26/2026 regulates the procurement of Crude Oil, Fuel Oil, and Liquefied Petroleum Gas (“LPG”) sourced domestically as well as from imports.

The procurement covers Crude Oil for domestic refinery purposes, as well as Fuel Oil and LPG to support supply availability for the public and industry. Furthermore, Presidential Regulation 26/2026 provides the basis for implementing domestic and imported energy procurement to support the availability and distribution of Fuel Oil and LPG throughout the territory of Indonesia.

Key Provisions

Scope and Sources of Energy Procurement

Article 2 stipulates that national energy procurement consists of domestic procurement and import procurement. Under Article 3, domestic procurement of Crude Oil is sourced from upstream oil and gas production activities, whereas the procurement of Fuel Oil is sourced from oil refinery production, and the procurement of LPG is sourced from oil and gas refinery production.

Import Procurement Mechanism and Approval Obligations

Import procurement may be conducted based on intergovernmental cooperation agreements, cooperation between the Central Government and overseas providers where the implementation of the import is carried out by Public Service Agencies (Badan Layanan Umum, “BLU”) or State-Owned Enterprises (“SOEs”) in the energy sector, as well as cooperation between Businesses in the energy sector and overseas providers as set forth in Article 4. In addition, Businesses in the energy sector must obtain an import approval in accordance with the provisions of laws and regulations prior to implementing the import, as stipulated in Article 8 paragraph (1).

Import Procurement in Urgent Circumstances and Export Restrictions

The Minister of Energy and Mineral Resources may declare urgent circumstances allowing BLUs or SOEs in the energy sector to conduct import procurement based on the criteria stipulated in Article 5 paragraph (1), namely:

1. Geopolitical conditions that potentially disrupt the smooth global availability of Crude Oil, Fuel Oil, and/or LPG;

2. Supply chain disruptions of Crude Oil, Fuel Oil, and/or LPG domestically and abroad;

3. Disasters or force majeure events in supplier countries;

4. Supply limitations resulting in high price fluctuations; or

5. National minimum reserves of Crude Oil, Fuel Oil, and/or LPG falling below the threshold.

In such urgent circumstances, the parties may agree on purchase price differences based on volume, product type, country of origin, and delivery time as stipulated in Article 5 paragraph (3). Furthermore, the Government may freeze and/or suspend the export of Crude Oil and/or its by-products derived from domestic upstream oil and gas production activities if deemed necessary for national energy security, as stipulated in Article 10.

Implementation of Import Procurement and Financing

SOEs must refer to the annual requirement plan that has obtained allocation approval from the Minister of Energy and Mineral Resources in carrying out imports, as stipulated in Article 7 paragraph (1). Under urgent circumstances, SOEs may conduct procurement through direct appointment or direct purchase in accordance with Article 7 paragraph (3). Subsequently, based on market fluctuation conditions and limited availability in the global market, SOEs may agree on procurement contracts for a specific period or on a multi-year basis in accordance with Article 7 paragraph (4). In addition, the financing of imports by BLUs may be sourced from internal funding as well as other legitimate sources in accordance with the provisions of laws and regulations as set forth in Article 6. The calculation of compensation for SOEs may also consider the global baseline price determined by the Minister of Energy and Mineral Resources in accordance with Article 14 paragraph (2).

Storage of Imported Products and Domestic Transactions

In accordance with Article 8 paragraph (2) and paragraph (3), BLUs in the energy sector, SOEs in the energy sector, or Businesses in the energy sector may store imported products in the facilities below, with a specific provision that storage in KPBPB or PLB shall be accounted for as Energy Buffer Reserves and/or Operational Reserves:

1. Indonesian customs area;

2. Free Trade Zones and Free Ports (Kawasan Perdagangan Bebas dan Pelabuhan Bebas, “KPBPB”); or

3. Bonded Logistics Centers (Pusat Logistik Berikat, “PLB”).

Furthermore, under Article 9 and Article 11, BLUs in the energy sector, SOEs in the energy sector, and/or Businesses in the energy sector may conduct procurement from a KPBPB or PLB subject to the imposition of import duties in accordance with customs provisions and selective inspections based on risk management. The products sold by BLUs in the energy sector to SOEs in the energy sector and businesses in the energy sector from such KPBPB or PLB are also treated as domestic transactions and must be paid in Rupiah.

Supervision, Reporting Obligations, and Administrative Sanctions

The Minister of Energy and Mineral Resources supervises the procurement of Crude Oil, Fuel Oil, and/or LPG, while the Downstream Oil and Gas Regulatory Agency (Badan Pengatur Hilir Minyak dan Gas Bumi, “BPH Migas”) regulates and supervises the distribution of Fuel Oil as stipulated in Article 12. In addition, BLUs in the energy sector, SOEs in the energy sector, and/or Businesses in the energy sector must submit monthly activity reports to the Minister of Energy and Mineral Resources no later than the 15th of the following month in accordance with Article 13 paragraph (1). Said reports shall be evaluated and followed up on in accordance with the provisions of laws and regulations, including through the imposition of administrative sanctions if violations are found, as stipulated in Article 13 paragraph (2).

Transitional Provisions

Declarations of procurement in urgent circumstances determined by the Minister of Energy and Mineral Resources prior to the effective date of Presidential Regulation 26/2026 shall remain valid, as stipulated in Article 14 paragraph (1). Moreover, the resolution of alleged legal violations reported to the Indonesian National Police, the Public Prosecution Service of the Republic of Indonesia, or the Corruption Eradication Commission in relation to irregularities committed by BLUs in the energy sector, SOEs in the energy sector, or Businesses in the energy sector shall primarily be resolved through administrative mechanisms in accordance with Article 13 paragraph (3).

Closing

Presidential Regulation 26/2026 regulates the procurement of Crude Oil, Fuel Oil, and LPG sourced domestically as well as from imports, including the procurement of Crude Oil from upstream oil and gas production activities, the procurement of Fuel Oil from oil refinery production, and the procurement of LPG from oil and gas refinery production. Import procurement may be conducted through several cooperation schemes and must be preceded by an import approval in accordance with the provisions of laws and regulations. Under urgent circumstances declared by the Minister of Energy and Mineral Resources, import procurement by SOEs may be conducted through direct appointment or direct purchase. Meanwhile, in addressing market fluctuation conditions, SOEs may agree on multi-year contracts. This series of policies may also be followed by the potential freezing or suspension of Crude Oil exports if deemed necessary for national energy security. Presidential Regulation 26/2026 also regulates the storage of imported products as Energy Buffer Reserves or Operational Reserves, procurement from KPBPB and PLB, and the treatment of domestic transactions which must be settled in Rupiah. Furthermore, energy procurement is under the supervision of the Minister of Energy and Mineral Resources, while Fuel Oil distribution is specifically supervised by the Downstream Oil and Gas Regulatory Agency, accompanied by monthly reporting obligations and the imposition of administrative sanctions for violations. As a transitional provision, declarations of procurement in urgent circumstances determined prior to the effective date of Presidential Regulation 26/2026 shall remain valid, whereas the resolution of alleged legal violations in relation to irregularities committed by BLUs in the energy sector, SOEs in the energy sector, or Businesses in the energy sector shall primarily be resolved through administrative mechanisms.