The Indonesian government has decided to put illegal oil and gas operations under the supervision of State energy company PT Pertamina.

This policy is stipulated in a new Ministerial Regulation (Permen) currently being prepared by the Ministry of Energy and Mineral Resources (ESDM). The regulation focuses on the application of technology and the management of aging wells.

An expert staff to the ESDM Minister, M. Iksan, emphasized that rather than shutting down illegal aging wells outright, the government will provide mechanisms to ensure their safe and regulated operation.

"For illegal aging wells, we will establish mechanisms to ensure their safety. They will be supervised by Pertamina and regional governments to implement good production techniques. If they fail to comply within 3-4 years, the wells will be shut down again," Iksan said in a statement as quoted on Wednesday April 9, 2025.

The government will also open opportunities for legal management of aging wells through operational cooperation schemes (KSO) and possible involvement of cooperatives as local partners.

"We are providing options, either KSO or cooperative management, as long as it’s legal," Iksan added.

As part of the regulation, abandoned aging wells will be given flexibility to use technology to enhance production. "So it’s not just about ‘cleaning’ wells, but also applying technology, shifting layers, re-drilling, sidetrack drilling, and more," Iksan said.

To ensure proper monitoring and distribution, production from these wells will be required to be sold to Pertamina, with designated buyers including regional government-owned enterprises (BUMD) or appointed cooperatives.

This approach aligns with the government's long-term vision of achieving energy self-sufficiency.

Despite challenges such as limited natural resources and reliance on foreign technology, the government sees potential in renewable energy development, efficiency improvements, and international cooperation.

"The government continues its efforts to boost energy production and develop renewable energy. We aim for the nation to truly achieve energy self-sufficiency," Iksan said.

Pertamina Vice President for Corporate Communication, Fadjar Djoko Santoso, said Pertamina fully supported the government's efforts to regulate aging wells and ensure a structured transition for illegal operations.

“This will not only enhance national energy security but also create a safer and more sustainable environment for the industry," Fadjar said.

Concerns on foreign investment

However, not all stakeholders view this policy favorably. Moshe Rizal, Chairman of the Investment Committee of the National Oil and Gas Company Association (ASPERMIGAS), criticized the government’s approach, arguing that it could deter foreign investment.

"Allowing illegal drilling operations to continue, even under supervision, sends the wrong message. The oil and gas industry requires strict safety and environmental standards, and letting unregulated players operate for years creates an uncertain investment climate," Moshe said.

He emphasized that illegal drilling should not be tolerated as it is part of a larger organized crime network.

"Illegal drilling is not just about small local operators; it is an organized crime system. In many cases, these operations are backed by powerful interests that bypass safety regulations and exploit resources illegally. The government should eradicate, not regulate, such activities," he asserted.

Safety standards

Moshe Rizal also raised concerns about the safety risks associated with allowing unqualified operators to manage oil and gas wells.

"The oil and gas sector is highly specialized, involving petroleum engineers, drilling engineers, reservoir engineers, and other experts who undergo years of education and certification. Safety and environmental regulations in this industry are extremely rigid because even minor errors can lead to fatal accidents," he cited.

He warned that providing short-term training programs for illegal drillers would not be sufficient to ensure safe operations.

"You cannot turn an untrained individual into a qualified petroleum engineer in just a few weeks or months. The complexity of this industry requires proper, structured education and training that takes years to complete. If safety protocols are ignored, accidents will happen, and lives will be lost," he said.

He concluded by urging the government to enforce strict safety compliance rather than adopting lenient policies.