State-owned investment holding Danantara is reportedly preparing to sign a massive $8 billion engineering, procurement, and construction (EPC) contract with U.S.-based engineering firm KBR Inc. to build 17 modular oil refineries across Indonesia, according to internal documents from the Coordinating Ministry for the Economy and sources with direct knowledge of the plan.

The refinery deal forms part of a broader U.S.-Indonesia trade agreement announced last week, under which the United States agreed to lower import tariffs on select Indonesian products from 32 percent to 19 percent. The agreement is being touted as a breakthrough in bilateral trade relations.

Coordinating Economic Minister Airlangga Hartarto, who led the negotiations, disclosed the modular refinery plan during a closed-door meeting with business leaders in Jakarta on Monday, July 21, 2025. Two attendees confirmed the contents of the presentation, which was also reviewed by Reuters.

While neither Danantara nor KBR Inc., formerly Kellogg Brown & Root, has issued an official statement, the deal signals a major expansion in Indonesia’s downstream oil and gas infrastructure. Technical details of the modular refinery projects remain undisclosed.

The refineries are expected to strengthen Indonesia’s refining capacity and reduce dependency on fuel imports. The government has previously highlighted the urgency of modernizing domestic refining infrastructure, much of which is outdated and operating below capacity.

The refinery project emerged alongside other major trade and investment deals involving U.S. companies. The presentation also revealed a $2 billion proposed investment by Indonesian petrochemical giant Indorama in a blue ammonia facility in Louisiana, pending final approval of tax incentives by U.S. authorities.

In the aviation sector, President Donald Trump announced that Indonesia will purchase 50 Boeing aircraft, with total aviation-related transactions reaching $14.4 billion. Overall, the potential value of the U.S.-Indonesia trade package is estimated at $34 billion, according to the same government documents.

The Indonesian government sees this trade package as a crucial step toward a comprehensive trade agreement with the United States. "Indonesia welcomes more investment and business from the U.S. to drive job creation, technology transfer, and the advancement of national priority projects," one slide in the presentation stated.

The government estimates the tariff reductions alone could lift Indonesia’s GDP growth by as much as 0.5 percentage points.

Major U.S. firms such as Apple and General Electric are also expected to benefit from relaxed local content rules in Indonesia’s tech and healthcare sectors. Indonesia’s domestic content requirements had previously been a source of tension, with Apple at one point barred from selling the iPhone 16 due to noncompliance.

That stance has softened after Apple pledged to invest more than $300 million in Indonesia, paving the way for renewed access to the growing consumer electronics market.

The developments mark a significant strategic pivot, positioning Indonesia not only as a major recipient of U.S. investment but also as a more integrated player in global supply chains across energy, aviation, and technology.