Indonesia’s Minister of Energy and Mineral Resources issues a new Regulation limiting the roles available to foreign employees in upstream oil and gas industries.

Stringent Policies

Companies investing and operating in Indonesia will be fully aware of the restrictions placed on foreign recruitment in Indonesia. These stringent hiring policies have recently been tightened even further: the Ministry of Energy and Mineral Resources has issued Regulation number 31 of 2013 restricting the roles that foreigners can undertake in upstream oil and gas industries.

Regulation 31/2013

Regulation 31/2013 declares that foreigners working for an upstream oil and gas company cannot undertake the following roles:

  • In-house legal counsel
  • Human Resource functions
  • Health and Safety Environment officer
  • Supply chain functions, including procurement and logistic officers
  • Quality control officer/inspector
  • Low level exploitation and exploration employees (superintendent level and below)

Exploration & Exploitation

Further, Regulation 31/2013 provides that where an upstream oil and gas company and a contractor are undertaking exploration and exploitation based on a production sharing contract, they need to obtain a recommendation from the Directorate General of Oil and Gas before they are able to employ any foreign employees. Failure to obtain the recommendation will prevent the costs incurred being recovered from the Government of Indonesia. Foreign employees are also prohibited from taking up more than one function.

Cautious Approach

Regulation 31/2013 makes it even more difficult for foreigners to take up employment within the upstream oil and gas industry in Indonesia; employers should therefore review their manpower needs and where possible look to engage locals. Where foreigners are to be employed, a cautious approach needs to be taken to the roles that they perform, and the Directorate General should be approached as early as possible to provide its recommendation.