The Ministry of Energy and Mineral Resources (ESDM) has launched an inventory taking of community-operated illegal oil wells across 10 priority regions, with completion targeted by the end of July 2025. 

The initiative follows the issuance of ESDM Ministerial Regulation No. 14/2025 on cooperation in managing work areas with existing production sharing contractors (KKKS).

Deputy Minister of ESDM, Yuliot Tanjung, said the identification process is already underway in several provinces, including Aceh, Jambi, and South Sumatra in Sumatra, as well as Central Java and East Java on Java Island.

"With this inventory, we aim to gather preliminary data on these community wells. Our joint team has been working in the field and we expect to complete the data collection by the end of July," Yuliot told a press conference on Tuesday, July 2, 2025..

The government also emphasized the importance of integrating socio-economic considerations in the process. Local governments, Yuliot said, have begun initial communication and data collection related to the economic impact on surrounding communities.

"We will engage with community groups that manage these wells, including discussions on legal mechanisms, benefits for local economies, and how these activities could be formalized," he said.

To legitimize operations, communities are encouraged to establish legal entities, particularly limited liability companies (PT). This would allow local groups to become shareholders and potentially qualify as micro, small and medium enterprises (MSMEs), with capital requirements starting from Rp5 billion (US$312.500) for small-scale and up to Rp10 billion (US$615.000) for medium-scale businesses.

The government aims to integrate community production into the national oil lifting records as early as August.

"If the inventory is completed by July, implementation can begin immediately in August, allowing the output to be officially recorded as part of national production," Yuliot said, citing a production target of 10,000 barrels from community wells by the end of the year.

Illegal refineries

Yuliot also addressed concerns regarding illegal oil refineries, which he said are problematic due to substandard processing practices and lack of operational licenses.

"Moving forward, enforcement will involve both guidance and crackdowns, especially with support from the Ministry's Directorate General of Law Enforcement (Ditjen Gakkum). We will prioritize community coaching while also cutting off supply chains to illegal operators," he said.

According to the ministry, community wells are expected to channel their production to Oil Contractors partners, thereby eliminating supply to illicit processors and disrupting unregulated networks.

In terms of state revenue (PNBP), the oil and gas sector recorded only 32 percent achievement in the first half of 2025. However, Yuliot remains optimistic.

“If lifting increases, we will see a proportional rise in state revenues,” he said.