13 Oct 2017

To promote a more conducive investment climate, the Ministry of Energy and Natural Resources (“Ministry”) is simplifying and streamlining the procedures for the application of upstream and downstream oil and gas related licenses by way of its regulation No. 29 of 2017 concerning Licenses in the Field of Oil and Gas (“Regulation 29”).

Regulation 29 came into effect one month following its enactment, as of which date the new procedures and requirements started to apply for two (2) upstream licenses and four (4) downstream licenses, as follows:

i. Survey License (upstream);
ii. Oil and Gas Data Management License (upstream);
iii. Oil and Gas Processing Business License (downstream);
iv. Oil and Gas Storage Business License (downstream);
v. Oil and Gas Transportation License (downstream); and
vi. Oil and Gas Commerce License (downstream).

Although the technical and administrative requirements are in a way similar, if not completely the same as those of the previous regulations that were revoked, a welcome news brought by this Regulation 29 is that the application can be done online and that most of the applied licenses could issued in the space of 10 to 15 calendar days, which in Indonesian standards is quite fast for non-general operational licenses. In practice, the ambitious time frame still needs to be experienced.

In general, the application procedure starts with the submission of the application to the Ministry through the Director General of Oil and Gas (“Director”), along with the administrative and technical requirements listed in an appendix of Regulation 29. The Director will examine and evaluate the application and ask for clarification where necessary, and upon finding the application documents to be satisfactory will issue a recommendation to the Minister for the issuance of the license.

Particularly for applications for Oil and Gas Processing Business License, Oil and Gas Storage Business License, Oil and Gas Transportation License, and Oil and Gas Commerce License, following the assessment of the application, the applicant may be issued either a temporary license or a non-temporary license.

The applicant will receive a temporary license if means and facilities as well as a license from another institution still need to be procured for the activities. To convert its temporary license into a non-temporary license, the business entity must pass the Director’s evaluation of its fulfillment of the obligations and technical requirements.

Aside from regulating procedures and requirements for the oil and gas licenses applications, Regulation 29 also stipulates the duties and responsibilities of the license holders and assigns the Director to supervise the license holders’ business activities.

Previously issued licenses covering the same activities will be honored until their expiration dates, whereas license applications already submitted to the Ministry before the coming into effect of Regulation 29 will be processed in accordance with the provisions of Regulation 29. (by: Giffy Pardede)