President Widodo: Streamlining of Upstream Oil and Gas Bureaucracy Will Continue

The government will continue to streamline rules and regulations related to the upstream oil and gas industry in a bid to attract investors, President Joko Widodo said during his opening speech at the 42nd Indonesian Petroleum Association Exhibition and Convention today. “Our regulatory (environment) is still less conducive to attract investment. It is confusing and complicated,” admitted the President.

“There are still many regulations and procedures that need to be trimmed down and I want to know any regulations that still give you concerns,” said the President.

The Energy and Mineral Resources Ministry have removed 186 regulations, of which 14 are directly related to upstream oil and gas over the past year.

Ronald Gunawan, the President of the Indonesian Petroleum Association, said the industry appreciates the government’s push to streamline rules and regulations in upstream oil and gas.
Moving forward, Ronald Gunawan said the industry expects that other ministries and government agencies, as well as regional governments, will also streamline rules and regulations related to upstream oil and gas industry.

The 42nd Indonesian Petroleum Association Convention and Exhibition kicked off today, carrying the theme “Driving Indonesia’s Oil and Gas Global Competitiveness”.

The theme is relevant given Indonesia’s diminishing oil output while global industry majors are becoming more selective in deciding where to invest. Domestically, industry players are also adapting the new gross split scheme. 

“The switch from PSC Cost Recovery to PSC Gross Split is a significant change, which is aimed at giving contractors greater flexibility to carry out efficiencies in their operating activities,” said Ronald Gunawan, adding that the gross split scheme had started to garner positive results, as seen in five working areas being awarded in oil and gas auctions in 2017.

The government is ready to improve the gross split further in order to attract more investors. 
“I want this forum to speak openly on which regulations still create complications. If not to the (Energy and Mineral Resources) Minister then straight to me. This also includes the gross split scheme and identifying which part still need to be fixed or improved,” President Joko Widodo said.
The President said that the oil and gas industry would continue to play an important role in the energy security agenda for the foreseeable future, despite the increasing presence of new technological advancements such as electric vehicles.

Echoing the President’s remarks, Ronald Gunawan said the National Energy Blueprint stipulates that oil and gas would still account for 44% of national energy consumption by 2050. “From this, we can conclude that oil and gas will remain a backbone to the national energy (agenda) for the next 20-30 years,” he added.

Amien Sunaryadi, the Chairman of The Special Taskforce for Upstream Oil and Gas Business Activities (SKK Migas), said the government can also learn from success stories in oil and gas reform in other countries. “Investors can choose, whether to put their money in Indonesia or in other countries. That is why we need to see what’s happening in other countries every now and then,” he added. (*)

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