Indonesia seeks simpler oil and gas licensing and deferred exploration taxes
A proposed Special Business Entity would coordinate permits for contractors, replacing separate applications to multiple ministries.
Indonesia’s draft Oil and Gas Bill proposes centralising upstream permits and allowing exploration contractors to defer tax payments, Energy and Mineral Resources Minister Bahlil Lahadalia said. The government aims to reduce bureaucracy and encourage investment through the changes.
At an industry forum in Jakarta on October 28, Bahlil said a Special Business Entity (BUK) would be authorised to manage licensing for production-sharing contractors, known locally as KKKS. Winning bidders could then obtain permits through one contact rather than applying separately to different ministries.
Bahlil put progress in discussions on the bill’s inventory of issues (DIM) at 90 per cent. Measures to strengthen the BUK’s powers remained among the provisions being finalised. He blamed administrative obstacles for exploration delays and said investors undertaking high-risk upstream projects needed certainty over regulation.
The proposed tax arrangement would cover contractors conducting exploration before production begins. Payments could be postponed until commercial results emerge. Bahlil said the aim was to reduce financial pressure at the exploration stage, while retaining the obligation to pay taxes when operations achieve commercial results.
He also urged operators to move faster on projects where exploration was complete and Plan of Development (PoD) approvals had been obtained. Accelerating those projects was necessary to raise domestic oil and gas lifting and curb dependence on imported energy, he said.
