Job Creation Law May Disrupt Production Target of 1 Million BOPD

Job Creation Law No. 11/2020 or the Omnibus Law on Job Creation, which regulates oil and gas business activities based on licenses from the central government, confuses business players because Law No. 22/2001 on Oil and Gas regulates the implementation of upstream business activities through cooperation contracts. "To date, the cooperation contract regime between upstream oil and gas business players and oil and gas authorities through SKK Migas is still in effect, not a business licensing regime," House of Representatives’ Commission VII Member Mulyanto said on Friday (11/27).

Therefore, Mulyanto urged the government to immediately resolve the confusion among the oil and gas business players. This is important so that the oil production target of 1 million barrels per day (bopd) and 12 billion standard cubic feet of gas per day (bscfd) by 2030 can be achieved. The problem is, investors may withdraw or hesitate to invest in Indonesia's upstream oil and gas sector due to legal uncertainty. "This needs to be clarified related to the plan to revise Law No. 22/2001 on Oil and Gas, to provide legal certainty for investors," he said.

According to Mulyanto, the government cannot arbitrarily equate all nomenclature of oil and gas business regulations with other business licensing terms. The reason is that the essence of the cooperation contract with business licensing is very different. "First, the cooperation contract places related parties on an equal footing. Second, business licensing places the licensor in a higher position than the licensee," Mulyanto explained.