Former Head of the Upstream Oil and Gas Regulatory Task Force (SKK Migas), Dwi Soetjipto, has voiced support for the establishment of a special state-owned enterprise (BUK) in the oil and gas sector, suggesting that it would strengthen Indonesia’s upstream oil and gas governance.

Dwi, who now leads the Dwi Soetjipto Research Center (DSRC), said the creation of the BUK was mandated by a Constitutional Court ruling on a judicial review of the Oil and Gas Law. The entity would represent the state in production-sharing contracts with oil contractors (KKKS) in the upstream sector.

“BUK must be independent to earn the trust of contractors and must be fair to investors,” Dwi said after attending the inaugural DSRC Dialogue in Jakarta on Wednesday, August 13, 2025.

The proposal is currently under discussion by Energy Commission XII of the House of Representatives (DPR) as part of deliberations to amend Law No. 22/2001 on Oil and Gas.

Dwi suggested that the BUK be placed under the Ministry of State-Owned Enterprises (SOEs) or the State investment management agency, BPI Danantara, as the enterprise would own assets.

“If BUK is formed as a business entity, its assets can be transferred to Danantara, which would accelerate the growth of Danantara’s portfolio,” he cited.

Dwi stressed that the formation of BUK would not dissolve SKK Migas outright but rather restructure it to enhance its role.

“The position of SKK Migas as a BUK would be stronger and would also contribute to increasing Danantara’s assets,” he added.

Earlier, on July 15, Commission XII legislators held a closed-door meeting to discuss the academic paper and draft bill. Commission XII deputy chairman Sugeng Suparwoto said there were two main issues under debate: the establishment of BUK and the creation of a petroleum fund.

If BUK is established, Sugeng noted, SKK Migas would be dissolved because the current institution was formed under a presidential regulation, whereas the BUK would be mandated by law. “This is to ensure legal certainty and business certainty in the upstream oil and gas sector,” he told reporters.

The proposed petroleum fund would be financed by contributions from KKKS and used mainly for exploration activities. “It would provide low-cost funding to support oil exploration,” Sugeng cited.

He emphasized that the government must be involved in finalizing the bill, noting that one of the most contentious debates remains the status of SKK Migas versus the proposed BUK.

Sugeng expects the bill to be passed in 2026, following the completion of the Renewable Energy Bill and the Electricity Bill.