Indonesian President Asks for Further Oil-Gas Deregulations

President Joko Widow in 42nd IPA Convention and Exhibition (Credit: Ministry of Energy and Mineral Resources).

JAKARTA (TheInsiderStories)–President Joko Widodo has called for the need of further deregulation in the oil and gas sector to attract more investments to the sector. The government has revoked 186 conflicting regulations in the energy sector, but apparently it is not enough to improve investment climate in this sector.

Last year, the investment in the energy sectors only reached US$26.7 billion, it shrunk by 10 percent from the 2016 investment of $29.7 billion. It also lower than investment in the 2014 and 2015 that reached $33.5 billion and $32.3 billion respectively.

Industry players had said the government set the unrealistic investment target in 2018 of $37.2 billion. The target was actually a revised version from the initial $50,12 billion target.

“Our regulations are still complicated and not conducive for the growth of oil and gas industry. We need to further simplify the licensing procedures,” President Widodo said when opening the 42nd convention and exhibition of the Indonesian Petroleum Association (IPA) in Jakarta on Wednesday (02/05).

He asked the participants of the IPA to inform the minister or himself on the procedures that need to be cut. According to him, this month the government will apply an online system of single submission.

“This will allow licensing procedures to be completed through one-stop service in one building office. Hopefully, We’ll launch it this month,” he said.

In general, the government continues to offer more incentives in a bid to lure investment in the upstream sector and stimulate exploration for the discovery of new fuel reserves.

With the Government Regulation No. 27 of 2017 on refundable operating cost and income tax in oil and gas businesses, Jakarta has cut down potential costs for the operators.

It also changed its approach in amending the gross split scheme launched in January 2017, by consulting the matter with industry association and petroleum economists.

Indonesia still has issues with poor local governance, lack of incentives for investors, and insufficient infrastructure to support the development of these unconventional reserves. The government needs to carefully listen and consider these inputs to revive the industry.

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