Indonesia pushes energy sovereignty as investors turn selective on sector

The focus is on domestic production and infrastructure.

Indonesia is stepping up efforts to boost energy sovereignty, proposing to raise its national energy stockpile to 30 days from 18, according to a report by DBS Insights Direct.

The move is expected to increase reliance on domestic production and drive demand for storage, logistics and supporting infrastructure.

The initiative also aligns with Jakarta’s broader push to improve the investment climate and attract downstream manufacturing and industrial projects, particularly foreign direct investment (FDI).

Energy prices in 2026 are expected to be driven mainly by supply and demand rather than macro conditions.

The Newcastle coal benchmark is forecast at $110–130 per tonne, with limited downside as Indonesia keeps output in check and China continues importing seaborne coal.

Brent crude is projected to stay below $70 per barrel, though geopolitical risks could push prices higher.

Energy stocks delivered mixed returns in 2025. Coal names underperformed as dividends fell and earnings disappointed, while lower oil prices hurt sentiment across the sector. M&A activity became a key market catalyst as profits weakened.

Medco Energi outperformed after raising its Corridor stake to 70%. Pertamina Gas (PGAS) and Pertamina Geothermal Energy (PGEO) were supported by buybacks and dividends. Coal stocks lagged as selling prices declined.

Valuations remain closely tied to dividend outlooks rather than commodity cycles. Investor caution toward fossil fuels continues to cap rerating potential, particularly for thermal coal producers.

After strong gains in parts of the sector in 2025, analysts are taking a selective stance going into 2026. Preferred themes are rising foreign investment, expanding logistics and storage needs, and faster renewable adoption.

AKR Corporindo is positioned to benefit from higher industrial park demand as FDI recovers. Medco Energi is supported by improving associate earnings, whilst Pertamina Geothermal Energy and Alamtri Resources are seen as beneficiaries of Indonesia’s renewable push.