Hulu Migas Investment Stalls Due To Regulations, Luhut Protests To Sri Mulyani

Coordinating Minister for Maritime Affairs and Investment Luhut Binsar Pandjaitan. (Photo: Doc. ANTARA)

Coordinating Minister for Maritime Affairs and Investment Luhut Binsar Pandjaitan revealed that there has been very little investment in the upstream oil and gas sector in Indonesia in the last 30 years.

Luhut said, there are at least 11 things that must be addressed regarding issues related to the oil and gas industry so that they can attract new investors to enter and invest in Indonesia.

Luhut said he had reported this issue to President Joko Widodo and Elected President Prabowo Subiyanto.

"I also say to our colleague the Minister of Finance, there is something wrong with you, there has been no investment for 30 years, there must be something wrong with the regulations," Luhut said in his remarks at the Supply Chain and National Capacity Summit 2024 event in Jakarta, Wednesday, August 14.

Furthermore, Luhut said that currently the government is handling 11 main problems in the oil and gas industry in all ministry task forces to increase energy security to reduce fiscal pressure.

"If no one wants to enter our house, there must be something wrong with us. So we can't just tell them it's good for you, but it's not good for investing. That's a way of thinking that we have to fix right now," he continued.

The 11 improvements that must be made include:

Exploration by accelerating environmental approval (UCL/UPL & Amdal); to about a month for the exploration stage

Aligning changes to agricultural land licensing for oil and gas activities; between the central and local governments

Enforcing the law of anti-illegal additions; in oil and gas fields that are considered state property

Completing the negotiations of forest compensation packages; between the government and the cultivators of forest resources

Accelerating offshore oil and gas work area licensing; through parallel and digital administrative processes

Optimizing the cost of utilizing marine areas; through the application of tariffs that do not apply retroactively

Advocating the support of the security forces; for areas of strategic oil and gas with significant security risks

Development of oil and gas distribution infrastructure networks; to reduce mismatch between supply and demand

Applying the support and commitment of the local government; to oil and gas activities

Production Improves the oil and gas tax regime; so that it is proportional and excludes the exploit phase

Optimizing indirect taxes on upstream oil and gas activities; through the revision of PP 27/2017 and PP 53/2017

"I formed a task force in my field, I asked them to identify why in the last 30 years our investment has been very small, maybe zero new oil and gas investments. The answer is, there are 11 things that we need to fix and I have reported to the President and Elected President, this is a problem that we must address," explained Luhut.