Meeting With Commission XII, Djoko Siswanto Reveals A Number Of Upstream Oil And Gas Challenges

Head of SKK Migas Djoko Siswanto. (Photo: Doc. ANTARA)

JAKARTA - Head of the Special Task Force for Upstream Oil and Gas Business Activities (SKK Migas) Djoko Siswanto revealed a number of strategic issues that pose a challenge in managing Indonesia's upstream oil and gas.

As for the first issue faced, said Djoko, it is the improvement of the upstream investment climate, both oil and gas. Djoko said that the issue that Contractors of Cooperation (KKKS) often face is related to the provision of indirect tax exemptions, especially in export activities.

"This export has not yet made money, even KKKS investors are spending money on export activities and we hope that there will be an implementation of the Assume and Discharge," he said at a Hearing Meeting with Commission XII DPR RI, Monday, November 18.

Djoko said, the follow-up expected by the saua actor was to accelerate the issuance of the revision of PP Number 27 of 2017 regarding the operating costs that could be returned and income tax treatment in the upstream oil and gas business bulk. Not only that, the KKKS is also waiting for the revision of PP Number 53 of 2017 regarding tax treatment at the upstream oil and gas business level with a gross split share contract.

"It should be emphasized that the provision of taxes is not directly given without economic consideration, especially for export activities that can be exempted," continued Djoko.

Then the second challenge that is often faced is related to environmental approval such as Environmental Management Efforts and Environmental Monitoring Efforts (UKL-UPL), as well as Environmental Impact Analysis (AMDAL).

"This frankly takes quite a lot of time, which is between 5 and 24 months," Djoko continued.

Djoko proposed that the standardization of the format and completeness of documents as well as the procedures for flpw and examination and hoped that the approval through e-sign an would be automatic through OSS and AMDAL Net as well as all upstream oil and gas activities to automatically get AMDAL

"Unless it pollutes the environment, it will be fined," added Djoko.

Keiga problem is an obstacle from upstream oil and gas operations in Sustainable Food Agriculture Land (LP2B). Djoko said that the approval of the transfer of LP2B function for cooperation contract contractors (KKKS) had not yet been issued even though the land had been acquired. He hopes that the approval can be obtained before the end of 2024.

Then another problem faced is related to the UN of the Earth's Body and Surface.

Related to this, Djoko explained that apart from the imposition of the UN, the Earth's Body on total lifting.

Djoko said the tax was also imposed on upstream oil and gas assets that were no longer used.

He suggested that the UN of the Earth's body was only subject to limited lifting of parts of the contractor and of locations that were actually used on land by the KKKS.

"Although the KKKS area is large, what is used is because the drilling wells are at least 10x10 and also production facilities, and also buildings in the field are not as wide as the working area. So don't be associated with lifting but as people have," explained Djoko.

As for assets that are no longer utilized, it is better to get PBB exemption. The reason is, these assets that are not utilized automatically become state assets.

"If you are taxed, the state itself should pay taxes. Entering the left pocket, the right pocket would be better if the assets that were not used were not subject to the PBB," continued Djoko.

The fifth issue is related to the suitability of Marine Space Utilization Activities (KKPRL) by the Ministry of Marine Affairs and Fisheries (KKP). Currently, Djoko said, the obstacles experienced were the process of KKPRL and UKL-UPL and AMDAL which could not be carried out in parallel. The second issue is the imposition of PNBP KKPRL on upstream oil and gas projects, including exploration activities.

"In the future, we propose PNBP Rp0 for oil and gas projects because it is a government project, especially exploration that has not yet made money, projects that are also still under construction and have not yet made money, we propose this for Rp0," explained Djoko.

Sixth, the issue faced by SKK Migas is related to gas absorption. Djoko said that currently there is an excess of natural gas supply in East Java and Natuna. He also projects that in the future there will be an excess of gas supply in the Aceh area.

"It is necessary to make efforts to optimize gas absorption from these sources which will increase state revenue, including achieving the target of our lifting, especially the oil equivalent barrel," said Djoko.

The last issue, Djoko said, SKK Migas and KKKS faced illegal drilling, refinery and tapping which made the potential for oil loss of 8,000 BOPDs.

"Currently, the draft Presidential Decree or even raised with the PP is related to the management of old wells which are carried out illegally by the local community," said Djoko.