Indonesia Plans to Establish Specialized Oil and Gas Agency to Centralize Upstream Project Approvals

en.Wedoany.com Reported - On October 28, Indonesian Minister of Energy and Mineral Resources Bahlil Lahadalia, at the 2026 Upstream Oil and Gas Economic, Financial and Commercial Forum held in Jakarta, proposed establishing a Special Oil and Gas Business Entity (BUK) through amendment of the Oil and Gas Law to centralize the processing of permits for upstream oil and gas exploration and investment projects. Discussion of the issue list for the relevant draft legal amendment has been approximately 90% completed, and the legislation is currently in the preparatory stage.

Under the proposed system, Production Sharing Contract contractors (KKKS) that have qualified through oil and gas block tenders may process subsequent exploration and project investment permits in a unified manner through the BUK. Bahlil requested expanding the agency's authority over administrative approvals to reduce the procedures whereby contractors must apply separately to different government departments for permits after winning bids.

The bill also proposes adjusting tax arrangements during the oil and gas exploration phase. For contractors still in the exploration period that have not yet achieved commercial development results, the government plans to allow deferral of relevant tax payments; once the project generates commercial results, tax obligations shall be fulfilled in accordance with applicable regulations. Both the tax adjustments and the centralized approval mechanism are part of this round of oil and gas law amendments.

In the project development phase, Bahlil requested that operators of oil and gas blocks that have completed exploration and obtained Plan of Development (PoD) approval accelerate the implementation of development projects. The Indonesian government is promoting the transition of approved oil and gas resource development plans into actual construction and production stages, and the relevant requirements cover Production Sharing Contract contractors that have obtained PoD approval.

The institutional authority, permitting procedures, and exploration-period tax arrangements involved in this reform still need to be determined through the amended law. The Indonesian government has advanced the compilation of the bill's issue list and will subsequently conduct joint deliberation with parliament.