The Oil and Gas Bill’s Narrow Window

Indonesia needs a stronger legal foundation for oil and gas investment, yet the bill intended to provide it may create new problems. The proposed revision of the Oil and Gas Law has resurfaced at a time when production is sluggish and competition for natural-resource investment is intense.

The draft revision of Law No. 22/2001 has appeared in the national legislation programme since 2015. At a House of Representatives plenary meeting on August 15, 2026, lawmakers again proposed it for deliberation. The revision follows a 2012 Constitutional Court ruling that found the Upstream Oil and Gas Business Activities Regulatory Agency, known as BP Migas, inconsistent with Article 33 of the 1945 Constitution.

The court said control over the management of natural resources had to return to the state through the relevant ministry. The government subsequently created the Special Task Force for Upstream Oil and Gas Business Activities, or SKK Migas, under Presidential Regulation No. 95/2012. Unlike BP Migas, an independent legal entity, SKK Migas operates within the Energy and Mineral Resources Ministry.

That arrangement, however, leaves SKK Migas with a weak legal position, the commentary argues. Its authority can be changed by the president, and its role in managing oil and gas contracts rests on a foundation that is not a law derived from the Constitution. Without legal certainty, investors may find Indonesia less attractive than regional competitors such as Vietnam, which offers oil and gas incentives under a firm legal framework.

The pressure to attract capital is clear in the production figures cited. Indonesia’s oil output averaged 600,000 barrels per day from January to July 2026, compared with domestic demand of 1.7 million barrels per day. New investment could raise production, tax revenues and economic growth.

But the bill’s proposed Special Oil and Gas Business Entity, or BUK Migas, has become a central concern. The entity would resemble SKK Migas while holding authority across upstream and downstream operations, including determining working areas, appointing contractors, and managing crude oil imports and exports. Those powers are currently divided among government institutions. The commentary argues that concentrating them in one body could undermine the accountability and integrity needed to reassure major investors.