Oil & Gas Import Licenses Now On-line

Indonesia' Oil and Gas Deficit Predicted to Occur in 2025
Oil & Gas Block- Photo by Energy and Mineral Resources Ministry

JAKARTA (TheInsiderStories) – The Indonesian government strives to streamline the export and import licensing process for the oil & gas industry with ‘Indonesia Single Window Submission’ (INSW), an integrated on-line portal service, beginning from February of next year, in a move to stimulate growth of the industry.

Through the online system, the trade licensing process will be expedited. Previously, contractors were to submit hard copies of documents to the Director General for Oil and Gas, the Special Task Force for Upstream Oil and Gas Business (SKK Migas) as well as Customs and Clearance, within 48 days.

Now oil and gas business players can process licenses within just 24 days, and all document submission is carried out ‘paperless’.

“Further, contractors will receive additional fiscal incentives, including free import duty, free import additional tax and free import income tax. We hope this new system will be fully implemented by next June,” Heru Pambudi, Customs and Clearance Director General, explained.

According to Heru, the online system will reduce production costs, referring to the Rp300 billion price cut for 14 rigs, thanks to efficient online trade license submission, which will further extend benefits of existing facilities, such as logistic bonded areas.

“There are 47 logistic bonded areas that have been used by 76 oil and gas related companies, with inventories valued at Rp920 trillion,” he pointed out.

If this online system proves successful, the government could then streamline other facilities to go online, including cost recovery management, as well as the asset management process.

Amien Sunaryadi, Head of SKK Migas, believes such an online system will boost investment in the upstream oil & gas industry. In addition, an increase in the price of oil over the last 2 months is expected to help boost investor confidence next year, making investment in the industry more attractive. The government has set a $13.5 billion investment target for 2018.

“This year, we are aiming for $14 billion in investment. In the first 9 months, investment in the oil & gas industry reached $6.4 billion, or only about 57 per cent of the target,” he admitted.

Such an online system has reduced logistic costs in Tangguh Train 3, where companies pooled inventories needed to develop the Train 3 project, in the Sorong logistic bonded area. Previously, BP pooled its inventories in Lamongan, West Java.

An efficient online system can save up to billions of dollars in cost recovery, as less time needed to procure goods, in particular those from overseas.

Written by Yosi Winosa, email: yosi.winosa@theinsiderstories.om