Indonesia's Base Oil Import Dependency: Where the Gaps Really Are
Indonesia's lubricant market is the largest in ASEAN, running at roughly 1.32 billion litres a year, according to figures presented by Pertamina at the ICIS Asian Base Oils & Lubricants Conference. The country also has its own base oil production, unlike several of its neighbours. That combination leads to an assumption that Indonesia's import dependency is modest. The reality, laid out by Pertamina itself, is more specific than that: the country runs a surplus in one base oil group and a structural deficit in the other two.
One producer, two very different pictures
Pertamina is Indonesia's only domestic base oil producer, running two facilities with very different roles.
The Cilacap refinery produces Group I base oil, with capacity of around 440,000 tonnes a year. PT Patra SK — a joint venture between Pertamina and South Korea's SK — operates a Group III plant at Dumai capable of producing 4cSt and 6cSt grades at up to roughly 505,000 tonnes a year.
According to Pertamina's own figures, that leaves the market split in two. Group III is in surplus: domestic supply exceeds 400,000 kilolitres a year against demand of only around a quarter of that. Group I and Group II, by contrast, are structurally undersupplied — demand runs at roughly 800,000 kilolitres a year, more than double what domestic production can cover.
In practical terms, Indonesia does not need to import premium Group III base oil in normal times. It needs to import the more conventional grades that make up the bulk of everyday lubricant blending — exactly the SN150, SN500 and Group II 150N/500N slate that most independent Indonesian blenders run on.
Where the imports come from
South Korea, Singapore, the Middle East and Malaysia are the main origins for Indonesia's Group I and Group II imports, alongside smaller volumes from Japan. Indonesia's import regime has also been eased over time, with a technical approval requirement previously administered by the Ministry of Industry removed from the base oil import process, simplifying the paperwork for buyers bringing in raw material.
Pricing through late 2025 showed just how import-driven this segment is. CFR Tanjung Priok base oil prices fell to around USD 852–857 per tonne in December 2025, a roughly 5% decline from the third quarter, according to ChemAnalyst and Expert Market Research assessments. The cause wasn't weak demand — it was an oversupply of cargo from Singapore and South Korea arriving faster than the domestic market could absorb it, building inventories at Tanjung Priok through November and December. Buyers, sensing the glut, simply waited for better offers.
What the war changed, and what it didn't
The Israel-US-Iran conflict that began in late February 2026 hit Indonesia's base oil market through a different channel than the import-volume shock felt in Vietnam. Because Indonesia produces its own Group I and a Group III surplus, it wasn't as exposed to a sudden loss of imported cargo the way a fully import-dependent market would be. What it couldn't avoid was the cost of its own feedstock. For the sequence of refinery outages that drove the regional shock, see our Hormuz base oil shock timeline.
Indonesia's domestic crude benchmarks tell that story clearly. The Arbei crude price, tracked by Indonesia's Directorate General of Oil and Gas, fell to a record low of USD 62.07 a barrel in December 2025 — and then surged to a record high of USD 118.57 a barrel by April 2026, before starting to ease to around USD 109.78 by May, according to CEIC data. Other domestic grades, including Sanga2 Mix, BD Karapan Condensate and Senoro Condensate, moved in the same pattern: a near-doubling in under four months. That matters directly for Pertamina's own production economics at Cilacap and Dumai, since higher crude costs feed straight into refining margins regardless of whether the finished base oil is sold domestically or exported.
The SK-Pertamina Dumai plant also underwent a 40-day Group III turnaround starting in May 2026, a scheduled event that temporarily reduced Indonesia's own Group III surplus. Given how far that surplus exceeds domestic demand in normal times, this is unlikely to have forced significant emergency importing on its own — but it does mean Indonesia's usual comfortable Group III position was thinner than normal for part of the year.
The ATIGA advantage is stronger here than it looks
For Malaysian-origin Group I and Group II base oil, Indonesia is one of the more favourable ASEAN markets on paper. Under PMK 43/PMK.010/2022, Malaysian-origin base oil imports qualify for zero duty under ATIGA with a Form D Certificate of Origin. Taiwan and Middle East-origin cargoes, by contrast, face Indonesia's standard MFN rate.
The detail worth knowing is what happens to South Korea, historically one of Indonesia's largest suppliers. Korean base oil falls under lube-oil tariff lines that sit on Indonesia's ASEAN-Korea Free Trade Area "Sensitive Track," which was only reduced to around 5% rather than eliminated. That means Malaysian-origin base oil holds a genuine landed-cost advantage over Korean-origin cargoes into Indonesia specifically — a duty gap that Malaysia does not get against Korea in every ASEAN market, since the two countries' trade agreements aren't structured identically from country to country.
What this means for buyers
For Indonesian blenders sourcing Group I and Group II base oil, the practical lesson from the past six months is that domestic production doesn't fully insulate a market from a global supply shock — it just changes which part of the cost structure absorbs it. Buyers who assumed Indonesia's own refining capacity meant limited exposure to the Middle East conflict still felt it through Pertamina's own feedstock costs and through the same regional Group I/II price pressure affecting Vietnam, the Philippines and other import-dependent markets.
It's also worth revisiting supplier mix with the ATIGA math in hand. A landed-cost comparison against Korean-origin material should account for the roughly 5-point duty difference, not just the FOB or CFR quote — the gap is real and it's structural, not tied to the current crisis.
Malaysia's position
Malaysia's Group I and Group II base oil moves to Indonesia via the Strait of Malacca, with no exposure to the Hormuz shipping disruption covered in our Hormuz base oil shock timeline. Combined with the ATIGA duty advantage over both Middle East and Korean-origin supply, Malaysian-origin SN150, SN500 and Group II 150N/500N are positioned to serve exactly the segment of the Indonesian market — conventional-grade base oil — where the country's own production genuinely falls short.
Frequently Asked Questions
Does Indonesia produce its own base oil?
Yes. Pertamina operates Indonesia's only domestic base oil production, with a Group I plant at Cilacap (around 440,000 tonnes/year) and a Group III joint venture with South Korea's SK at Dumai (up to roughly 505,000 tonnes/year).
Which base oil grades does Indonesia need to import?
Group I and Group II. Pertamina's own figures show domestic demand for these grades at roughly 800,000 kilolitres a year, more than double what domestic production covers. Group III, by contrast, runs in surplus domestically.
Where does Indonesia's imported base oil come from?
Primarily South Korea, Singapore, the Middle East and Malaysia, with smaller volumes from Japan.
Does Malaysian-origin base oil get a duty advantage in Indonesia?
Yes, and it's a stronger advantage than in some other ASEAN markets. Malaysian-origin base oil enters Indonesia at 0% duty under ATIGA with a Form D Certificate of Origin, while South Korean-origin base oil sits on Indonesia's ASEAN-Korea FTA "Sensitive Track" at around 5% rather than being duty-free.
Sources
Pertamina (via ICIS Asian Base Oils & Lubricants Conference); ICIS; ChemAnalyst; Expert Market Research; CEIC Data (Indonesia Directorate General of Oil and Gas); Lubes'N'Greases.
Sourcing SN150, SN500 or Group II into Indonesia?
Sanyang Petroleum supplies Malaysian-origin base oils into Indonesia and the wider ASEAN region, with ATIGA Form D and full quality documentation.