SKK Migas proposes three clusters to simplify licensing process

By Bernard Loebs

Upstream authority SKK Migas has proposed to create three clusters of licensing in order to simplify licensing process for oil and gas upstream sector.

The three clusters are first, the cluster of zoning licenses; second, the cluster of environmental, safety and security licenses; and third, the cluster of resources and infrastructure utilization licenses.

?If the creation of the clusters is realized, it will speed up the licensing process. In our proposal, SKK Migas should be appointed to handle all the licensing process. The results will be submitted to the Investment Coordinating Board (BKPM) for approval,? Didik S. Setyadi, Head of Formality Task Force at upstream authority SKK Migas said.

SKK Migas? data say there are 42 permits/licenses that have been transferred by the Ministry of Energy and Mineral Resources to BKPM for handling. Still, there a total of 341 permits/licenses scattered in 17 institutions of the local and central governments which have yet to be transferred to BKPM for handling.

Aside from the time-consuming licensing process, oil and gas investors are also faced with problems related to land appropriation. These are the reasons behind the long lead time between discovery and production. The lead time in Indonesia averages more than 10 years. There are even cases where the lead time reach 14 years.

?Meanwhile, the duration of the PSC is only 30 years. That?s why there are many PSC contractors who ask for contract extension. They spend a lot of time for licensing and land appropriation process,? SKK Migas? Secretary Budi Agustiono said.

In order to solve the obstacles faced PSC contractors, SKK Migas held a meeting on July 27-28, 2016 in Bali with officials from various ministries, governmental agencies, state owned firms and 11 regents and mayors from various parts of the country.

Editing by Johannes Simbolon