Indonesia Simplifies O&G Licenses to Attract Investors

MINISTRY OF ENERGY AND MINERAL RESOURCES

REPUBLIC OF INDONESIA

PRESS RELEASE

NUMBER: 381.Pers/04/SJI/2020

Date: 2 December 2020

Indonesia Simplifies O&G Licenses to Attract Investors

The Indonesian Government has issued a number of policies to promote industry growth and attract oil and gas investment, Minister of Energy and Mineral Resources (EMR) Arifin Tasrif has said at the opening of the 2020 International Convention on Indonesian Upstream Oil and Gas on Wednesday (2/12).

According to Arifin, the upstream oil and gas industry is full of uncertainties. "We've made a number of efforts to reduce the uncertainties in the hope that we can attract investment in the oil and gas subsector," said Arifin.

The first effort is to simplify licensing. Most licenses in the oil and gas subsector, Arifin said, have been handed over to the One Stop Service Center (PTSP) of the Indonesia Investment Coordinating Board (BKPM).

The second effort is to open upstream oil and gas data. EMR Ministerial Regulation Number 7 of 2019 provides for open data access for investors. The government has also supplied new data by completing the acquisition of 2D seismic data for 32,200 km of Open Area, the Energy Minister added.

The third effort is to apply a flexible fiscal system. This way, oil and gas contractors can decide which contract type suits them better, either a Gross Split-type Production Sharing Contract (PSC) or a Cost Recovery-type PSC.

"The government has also encouraged the integration of upstream and downstream businesses. To speed up the time needed for monetization, which is often caused by a price gap between the scale of economy on the upstream side and absorption (purchasing) power on the downstream side, the government has issued a policy on gas price reduction to promote the growth of domestic industry. A National Energy Grand Strategy is being prepared, too," Minister Arifin continued.

EMR Ministerial Regulation Number 8 of 2020 sets out the price of natural gas for certain industries at USD6 per MMBTU. These industries include fertilizer, petrochemical, oleochemical, steel, ceramics, glass, and rubber glove.

The next effort is to provide a fiscal stimulus. According to Arifin, the government has no longer gone after state revenue sharing (split), but has instead focused on project start. The government has provided incentives for several oil and gas Plans of Development (POD) that contractors have previously considered uneconomically viable.

For the record, the Indonesia National Energy Master Plan (RUEN) has estimated that oil consumption will grow by 139%, from 1.66 million bopd to 3.97 million bopd, by 2050. Meanwhile, gas consumption will grow even higher, from 6 thousand MMSCFD to 26 thousand MMSCFD or 298% by the same year.

The 2020 International Convention on Indonesian Upstream Oil and Gas has been organized by the Indonesian Special Task Force for Upstream Oil and Gas Business Activities (SKK Migas). Held as a virtual event from December 2 to December 4, 2020, the forum has been arranged to embrace all stakeholders so that they have the same understanding of the SKK Migas' vision for the increase in Indonesia's oil and gas production. (IY)

Head of Bureau of Communication, Public Information Services, and Cooperation

Agung Pribadi (08112213555)

Share This!