Minister of Energy and Mineral Resources (ESDM) Bahlil Lahadalia has issued a stern warning to Oil and Gas Contractors (KKKS) − revocation of oil and gas work area (WK) at the maximum − for their failure to immediately implement the already agreed Plan of Development (PoD).
Bahlil said that this measure was a direct directive from President Prabowo Subianto to increase national ready-to-sell oil production (oil lifting).
“On the orders of the President, KKKS who have explored but do not immediately continue their PoDs for production will be given a warning. If they still play around, their permits will be revoked,” Bahlil said in a hearing with Energy and Mineral Resources Commission XII of the House of Representatives (DPR) on Monday, November 18, 2024.
He emphasized that this policy is in accordance with the implementation of Article 33 of the 1945 Constitution, which stipulates that all state assets must be managed for the welfare of the people, not for the benefit of private parties or individuals.
“If the permit is revoked, they have no right to protest. This is state property, and the state has the full rights to take action if the rules are violated,” he said.
He cited that to date there are 301 oil and gas work areas that have completed exploration, but have not proceeded to the PoD implementation stage.
“There are 301 wells that have completed exploration, but unable to implement their PoDs as yet. We are checking further on what had happened behind all this,” he said.
In coordination with the Upstream Oil and Gas Regulatory Task Force (SKK Migas), Bahlil ensured that the government would not tolerate negligence that could potentially harm the country. He emphasized that this assertiveness is important to maintain the sovereignty of Indonesia’s oil and gas resources.
Bahlil has issued Ministerial Decree No. 110/2024 on Guidelines for the Return of Work Areas that are not yet operational in the framework of optimizing oil and gas production.
Three criteria
Deputy for Exploration, Development and Management of Work Areas at SKK Migas, Benny Lubiantara, said the ministerial decree provides SKK Migas with the task and authority to conduct an inventory of the parts of the work areas that are not yet operational to accelerate production based on three criteria.
First criteria is production fields that have been inoperational for two consecutive years (idle fields). Second is production fields other than PoDs that have not been operational for two consecutive years (Stranded PODs). Third is structure in the Exploitation Work Area that has received discovery status for three consecutive years (undeveloped discovery).
Benny cited the timeline to support the implementation of the inventory and production acceleration efforts. He asked all KKKS that have work areas affected by Ministerial Decree 110/2024 to fill out a form with four options.
First option is that the contractors will continue work on the relevant work areas and can apply for incentives.Second is that work will continue in collaboration with a business entity. Third is that the work will be done under a KSO (joint operation) mechanism. And fourth option is to return the work areas to the State.
“We want to work quickly and without delay, the form must be filled out and sent to SKK Migas no later than November 7, 2024. For KKKS that do not fill it out, it is considered that they do not take the options given,” Benny told a meeting with KKKS CEOs on November 1, 2024.
