Why Indonesia’s big refineries are teaming up with US on a $8 billion energy deal

Donald Trump last week said Indonesia would purchase 50 Boeing aircraft as part of the wider trade deal.

By: Express Web Desk
New Delhi | July 22, 2025 08:10 PM IST

3 min read

Danantara manages assets worth more than $900 billion and is involved in Indonesia’s long-term goal of increasing its economic growth rate to 8% from the current 5%. (Photo: X/@PiQSuite)

Indonesia plans to sign an $8 billion contract with US-based company KBR Inc to build 17 modular oil refineries, according to a government presentation and two sources familiar with the matter, Reuters reported on Monday.

The plan was shared during a closed-door meeting between Indonesian Economic Minister Airlangga Hartarto and local business leaders, Reuters said, citing two people who attended the briefing and viewed the presentation. The deal is linked to a recent trade agreement between Indonesia and the United States, which saw Washington lower proposed tariffs on Indonesian goods from 32 per cent to 19 per cent.

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Also read | Trump sets 19% tariff on Indonesia goods in latest deal, EU readies retaliation

KBR Inc, known as Kellogg Brown & Root, and Indonesia’s sovereign wealth fund Danantara are expected to sign the engineering, procurement, and construction contract. Neither party responded to Reuters’ request for comment.

Reuters reported that Danantara manages assets worth more than $900 billion and is involved in Indonesia’s long-term goal of increasing its economic growth rate to 8 per cent from the current 5 per cent.

The presentation, seen by Reuters, also mentioned other potential deals tied to the US-Indonesia agreement. This includes a possible $2 billion investment by Indonesian company Indorama in a blue ammonia project in Louisiana, which may require US tax credits to proceed.

US President Donald Trump last week said Indonesia would purchase 50 Boeing aircraft as part of the wider trade deal. According to the government’s presentation reviewed by Reuters, aviation-related agreements with American firms could total $14.4 billion. The total potential value of all deals could reach $34 billion.

The presentation also said, “Indonesia welcomes more US business and investment to create jobs, technology transfer and to support national priority developments.” It added that reduced tariffs could make Indonesia a competitive hub for regional industrial relocation.

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The government expects the trade deal could lift Indonesia’s GDP growth by 0.5 percentage points.

US firms such as Apple and General Electric are expected to benefit from eased rules on local content for IT and medical products. Indonesia previously banned iPhone 16 sales after Apple failed to meet domestic production rules. The ban was lifted after the company pledged to invest over $300 million in the country.

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