Exploration for oil in Indonesia dates back to 1871, with the first commercial production beginning in 1885, although most of its natural resources remained untapped until Indonesia gained its independence and became a Republic in 1945.

In the first half of the 20th century, three groups of merged companies under foreign ownership dominated exploration and production: Shell/BPM, STANVAC, and Caltex.

With independence following WWII, the oil, oil fields, refineries and supplies seized by the Japanese invasion force were returned to the Indonesian Government, and the new era of Indonesian energy exploration and production began.

The State Constitution of 1945 decreed that "All of Indonesia's land, water and natural resources are controlled by the State and will be utilized for the greatest benefit and welfare of its people", and oil and gas have played an instrumental role in Indonesia's economic development, with energy companies, both foreign and domestic, working in partnership with state bodies to find and produce oil, gas and geothermal energy.

In the Asia Pacific region, Indonesian oil production is second only to China, and its gas production is second to none.