Indonesia's 10% Oil and Gas Interest Policy Needs Refinement, Says Industry Association

The Association of Regions Producing Oil, Gas, and Renewable Energy (ADPMET) is urging for a refinement of Ministerial Regulation ESDM Number 1 of 2025 concerning the 10% participating interest (PI) for Regional-Owned Enterprises (BUMD). This call comes as the implementation of the policy faces considerable challenges, with ADPMET Secretary General Andang Bachtiar noting that only 13 out of roughly 79 oil and gas blocks have successfully granted this interest to BUMDs.

"This means there are still many obstacles, both in the negotiation process and in its implementation. This is what we must fix together," Bachtiar stated during a Focus Group Discussion (FGD) in Jakarta. He emphasized that the primary goal of the 10% PI policy is not solely to increase regional revenue but also to provide local governments with a greater role in managing oil and gas blocks, including access to production data, budgets, and business processes.

Bachtiar pointed out that certain provisions within the current regulation are open to multiple interpretations, potentially leading to legal disputes. "What needs to be fixed is not because the regulation opens the door to corruption, but because there are still articles that are open to interpretation, which can lead to different interpretations when implemented," he explained.

The FGD, organized by ADPMET in collaboration with PT Jakarta Offshore Energy (JOE), aimed to collect feedback from regions, BUMDs that hold PI, and those still in the process of obtaining it. The insights gathered are intended to form the basis for an academic paper to support the regulatory revisions. PT JOE Director Astar Simorangkir added that BUMDs managing the 10% PI also face challenges due to the lack of detailed implementation mechanisms in the existing rules, creating "grey areas" that could cause legal issues during audits. He stressed the need for clearer definitions, including the maximum limit for PI, to ensure consistent interpretation and strengthen governance.