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Govt simplifies regulations on oil, gas industry
The Energy and Mineral Resources Ministry is continuing to revamp and simplify its tangled regulations especially on the oil and gas sector, which has come to President Joko ‘Jokowi’ Widodo’s attention as revenues from the industry have been declining in recent years
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he Energy and Mineral Resources Ministry is continuing to revamp and simplify its tangled regulations especially on the oil and gas sector, which has come to President Joko ‘Jokowi’ Widodo’s attention as revenues from the industry have been declining in recent years.
Energy and Mineral Resources Minister Ignasius Jonan announced on Monday that a series of regulations, for the industry’s upstream and downstream sectors, have been either revoked or merged.
As many as 11 decrees under the ministry’s Directorate General of Oil and Gas and three regulations under the Upstream Oil and Gas Regulatory Special Task Force (SKKMigas) are being annulled. Meanwhile, 11 more decrees under the directorate general were also revoked last week, totaling 25 regulations on the oil and gas sector that have been removed this year.
“We decided to reduce or revoke many of the regulations thought to hamper investment in accordance with directives from President Jokowi,” Jonan told reporters at a press conference on Monday at the ministry.
The action is in line with the ministry’s ambitious target of restoring the industry’s heyday, with US$17.04 billion targeted in oil and gas lifting in 2018. The figure is similar to the 2014 and 2015 results of $20.72 billion and $17.38 billion, respectively.
This year’s target is 67 percent higher than the 2017 figure of $10.17 billion, which is the lowest result recorded in the past four years.
Jonan said the ministry anticipated more rule revocations in the upcoming weeks. “With all these revocations, we hope the flexibility [of the energy sector] can improve,” he said.
The 25 revoked regulations include several related to work safety, development of marginal oil blocs, foreign workers’ permits, management of the state’s facilities in the upstream activities, fuel distribution, equipment imports and auction and appointment of oil and gas working areas.
Many of the regulations were annulled or renewed as they were issued years ago and therefore, were no longer fitting to the development of the industry, with some decrees dating back as far as 2006, said Jonan.
The ministry’s acting director-general of oil and gas Ego Syahrial described the rule annulments as highly efficient, claiming that with the decision, a company that wanted to set up an oil refinery could now simply apply for one certificate of operational eligibility.
“Before the revocations, they might need as many as 3,000 certificates before they could be given a permit to build a refinery,” Ego said on the sidelines of the event.
The ministry would also no longer determine a refinery’s design feasibility nor conduct safety inspections as such assessments would be left up to the companies themselves, he added
In addition to slashing the red tape, the ministry is also currently forming several new regulations for the sector. One of them is expected to be used to regulate idle abandonment and site restoration (ASR) funds under SKKMigas.
On Feb. 7, SKKMigas deputy for control and procurement Djoko Siswanto said there was approximately $1 billion worth of ASR funding awaiting a new decree before it could be utilized to manage abandoned refineries.
“In the near future, the regulation will set up a common account containing the ASR funding for government agencies to use in priority projects,” said Djoko.
