Jakarta, CNBC Indonesia – Large-scale oil and gas companies are busy leaving Indonesia’s upstream oil and gas projects. Chevron, Shell and ConocoPhillips have declared their exits from upstream oil and gas projects in the country.
The latest is the news that Chevron Indonesia Company (CICO) has also said it will exit the Indonesia Deepwater Development (IDD) deep-sea gas project in East Kalimantan.
Shell also announced three years ago that it was leaving the giant Masela Block gas project in the Moluccas.
As for Chevron and Shell, so far they have not officially left the upstream oil and gas project in Indonesia because they are still looking for replacement partners.
So what are the main reasons that prompted the global oil and gas giant to leave Indonesia?
Referring to data from the Special Task Force for Upstream Oil and Gas Business Activities (SKK Migas), there are several things that make investors not interested in investing in upstream oil and gas in Indonesia, especially the issue of legal certainty.
The reason is that until now there is no definite permanent institution capable of overseeing production sharing contracts (PSCs) with oil and gas producers. As for the current establishment of SKK Migas, it is said that it is still temporary since the dissolution of the Executive Agency for Upstream Oil and Gas Businesses (BP Migas) by the Constitutional Court ten years ago on 13 November 2012 to be precise.
The accelerated revision of Law no. 22 of 2001 regarding Oil and Gas (UU Migas) will soon be completed. Therefore, there is legal certainty, especially regarding permanent institutions or commercial entities that can enter into contracts with oil and gas producers or cooperation contract contractors (KKKS).
PKS faction VII DPR RI Commission member Mulyanto assessed that the lack of legal certainty in Indonesia’s upstream oil and gas sector has forced several large global oil and gas companies to leave Indonesia.
Indeed, he continued, Indonesia needs these investors to boost domestic oil and gas production.
“Under these conditions, legal uncertainty has led to the departure of oil companies such as Total, Chevron, ConocoPhillips and Shell in the Masela bloc,” Mulyanto said quoted on Saturday (11/19/2022).
According to Mulyanto, this condition actually occurred because the discussions on the revision of the law n. 22/2001 on oil and gas (Oil and Gas) had not been completed. Therefore, he also encouraged the seriousness of the government in the immediate impetus of the discussion on the revision of the oil and gas law.
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