Indonesia is set to reactivate up to 30,000 idle oil wells across Sumatra and Central Java this year. The initiative, announced by Minister of Energy and Mineral Resources (ESDM) Bahlil Lahadalia, targets underutilized community wells, tapping into the hidden potential of micro-scale oil production.
These wells, predominantly located in South Sumatra, Jambi, North Sumatra, and Central Java, will be managed by cooperatives, regional government-owned enterprises (BUMDs), and micro, small, and medium enterprises (MSMEs). Each managing entity is required to have a minimum capital of IDR 5 to 10 billion, ensuring operational viability and professional management.
From Dormant to Productive: A New Chapter in National Oil Strategy
Under the Ministerial Regulation No. 14 of 2025, the Indonesian government aims to formalize and integrate community oil wells into the national energy production framework. Beginning August 1, 2025, surrounding oil companies will be able to legally purchase crude produced from these reactivated wells.
State-owned oil and gas company Pertamina is designated as the primary offtaker. The purchasing price will be set between 70% to 80% of the Indonesian Crude Price (ICP), offering a fair yet commercially viable rate for local operators.
“This is a breakthrough for national energy resilience,” said Minister Bahlil. “We’re unlocking a massive, underutilized resource while empowering regional economies.”
Importantly, the regulation makes clear distinctions: only qualified cooperatives and MSMEs—not those selling consumer goods—are eligible for well management. This ensures that operators have both technical understanding and financial capacity.
Potential to Add Up to 100,000 Barrels Per Day to National Output
Head of SKK Migas, Djoko Siswanto, estimates that each well could produce 2 to 3 barrels of oil per day. With 30,000 wells in operation, this could potentially add 60,000 to 90,000 barrels per day (bpd) to the country’s output.
“In fact, based on preliminary data from Blora, we believe production could even reach 100,000 bpd if expanded nationwide,” Djoko stated. Despite this high potential, the immediate target remains the 30,000 identified wells, prioritizing feasibility and swift implementation.
This community-driven approach presents a unique model for oil production—merging grassroots economic empowerment with national strategic goals. It also reflects a larger trend of decentralized energy initiatives emerging globally, where local stakeholders contribute to broader national supply chains.
The Ministry of Energy has emphasized that only well-capitalized entities can take part in the initiative. According to Director Yuliot, “Since this falls under the business activities of MSMEs, the required capital is about IDR 5 billion for small scale, and IDR 10 billion for medium scale operations. This could also be a combined capital from multiple MSMEs forming a consortium.”
By enforcing a minimum capital threshold, the government ensures operational safety, environmental compliance, and sustained output. The move also encourages MSMEs to collaborate, pool resources, and innovate around community-based energy production.
This strategy not only revitalizes Indonesia’s aging energy infrastructure but also empowers rural economies, turning dormant wells into sources of income, jobs, and regional development. Cooperatives, which have long been economic backbones in villages, will now play a pivotal role in the national energy equation.
The program also creates new opportunities for technological partnerships between local operators and established oil firms. Collaboration could include sharing drilling technology, safety standards, and environmental management tools—raising the bar for grassroots oil production.
