To promote a more conducive investment climate, the Ministry of Energy and Natural Resources recently simplified and streamlined the procedures for the application of upstream and downstream oil and gas-related licences through the Regulation concerning Licences in the Field of Oil and Gas (29/2017).
Regulation 29/2017 came into effect one month following its enactment. Under the new regulation, new procedures and requirements apply to the following upstream and downstream licences:
- survey licences (upstream);
- oil and gas data management licences (upstream);
- oil and gas processing business licences (downstream);
- oil and gas storage business licences (downstream);
- oil and gas transportation licences (downstream); and
- oil and gas commercial licences (downstream).
The new technical and administrative requirements are largely similar to those provided for by the previous regulations, which have now been revoked. However, the new regulation has introduced some welcome changes – namely:
- licence applications can now be made online; and
- most licences can now be issued within 10 to 15 calendar days, which – by Indonesian standards – is relatively fast for non-general operational licences. However, it has yet to be seen whether this ambitious timeframe will be met in practice.
In general, the application procedure starts with the submission of an application to the ministry through the director general of oil and gas, along with the administrative and technical requirements listed in an appendix to Regulation 29/2017. The director general will examine and evaluate the application and seek clarification where necessary. On finding the application documents to be satisfactory, the director general will issue a recommendation to the minister for the issuance of the licence.
Following the assessment of the application, the applicant may be issued a temporary or non-temporary licence. This is particularly the case for applications for oil and gas:
- processing business licences;
- storage business licences;
- transportation licences; and
- commercial licences.
Applicants will receive a temporary licence if they still need to procure the means and facilities, as well as a licence from another institution, to undertake the relevant activities. To convert a temporary licence into a non-temporary licence, a business must pass the director general's evaluation of whether it has fulfilled its obligations and the applicable technical requirements.
Aside from regulating procedures and providing requirements for oil and gas licence applications, Regulation 29/2017 also stipulates the duties and responsibilities of licence holders and authorises the director general of oil and gas to supervise licence holders' business activities.
Previously issued licences covering the above activities will be honoured until their expiry dates. However, licence applications that were submitted to the ministry before Regulation 29/2017 took effect will be processed in accordance with the regulation.
This article was first published by the International Law Office, a premium online legal update service for major companies and law firms worldwide. Register for a free subscription.