Oil & Gas Licensing Scheme in Jobs Law Disadvantaging Govt, Contractor

Summary

The change from a cooperation contract regime to an oil and gas business license in the Job Creation Law has the potential to disadvantage the government and business players. Energy observer from the Reforminer Institute, Komaidi Notonegoro, assessed that the change in this scheme will make the upstream oil and gas exploitation system resemble that of the general mining sector. "With licensing, there is no longer state control over the budget and production. Because it becomes the domain of parties who obtain the permit," Komaidi said, Thursday (10/15).

This condition, according to Komaidi, will also put the cooperation contract (KKKS) contractors at loss. With the business licensing mechanism, the KKKS concession license can be revoked at any time. "The permit issuer has the upper hand over the one given the permit to. Meanwhile, in the contract system, the positions of both parties are equal," he said.

In the Job Creation Law, Komaidi added, the government also did not provide further details regarding the provisions for the transition of a cooperation contract to a business license. This certainly has the potential to lead to unclear schemes and regulations in the future. Meanwhile, the government's move to further regulate a number of provisions by revising the Oil and Gas Law will have an impact, along with the enactment of the Job Creation Law.

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