Lawmakers to form working committee on new oil and gas bill

By Bernard Loebs

The House of Representatives (DPR) will establish a working committee to deliberate a new oil and gas bill, replacing the existing Law No. 22/2001 on oil and gas, lawmakers said on Monday.

The House’s Legislative Body (BALEG) plans to set up the working committee (PANJA) as part of efforts to draft a new legal framework for the sector, following a Constitutional Court ruling that invalidated key provisions of the current law.

The Constitutional Court dissolved the upstream regulator BP Migas in November 2012, ruling that articles governing the agency violated the constitutional principle that natural resources must be “controlled by the state” under Article 33 of the 1945 Constitution.

Following the ruling, the government established the upstream oil and gas task force SKK Migas in 2013 through a presidential regulation to temporarily replace BP Migas.

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Sugeng Suparwoto, deputy chairman of Commission XII of the DPR and a proponent of the bill, said the draft is not a revision of the existing law but an entirely new piece of legislation, as more than half of the previous law’s provisions have been annulled by the court.

“One of the key provisions in the new bill is the establishment of a Special Oil and Gas Business Entity (BUK Migas) to replace BP Migas,” Sugeng said during a BALEG plenary meeting.

The proposed law will also introduce a petroleum fund mechanism, a provision not included in the current legislation, aimed at improving the management of oil and gas revenues.

To reinforce the principle of state control, the draft stipulates that mineral rights remain with the state, mining rights are held by the government, and economic rights will be assigned to BUK Migas.

Lawmakers said the new bill is expected to provide greater legal certainty and strengthen governance in Indonesia’s oil and gas sector, in a bid to attract much-needed investment.

Edirting by Reiner Simanjuntak