Abstract
Indonesia's oil and gas governance has been specified in certain laws. The first oil and gas law was Emergency Law No. 44 of 1960. This law was changed to Law No. 8 of 1971 which gave a dual function, namely to Pertamina National Oil Company (NOC), as an operator and regulator. Meanwhile, the function of policy making was carried out by the government. These two functions are known as “two feet.” Furthermore, with the promulgation of the Oil and Gas Law No. 22 of 2001, there was a separation of regulatory functions by Pertamina and giving them to state institutions known as BP Migas. The agency was later converted into two different institutions, SKK Migas for regulating upstream oil and gas and BPH Migas for downstream regulation. These functions are known as ‘three feet'. However, the Oil and Gas Law No. 22 of 2001 received a lot of criticism, because this law was considered too liberal and put Pertamina as a NOC to compete openly with the International Oil Company (IOC) which was considered to have more good advantages in technology, capital, and risk management. The existing Oil and Gas Law has caused prolonged stagnation in the national oil and gas industry, and reduced the performance of this strategic industry in terms of lifting, exploration, exploitation and oil production. This study is intended to provide a description regarding the various design concepts of oil and gas law governance by referring to the oil and gas management and performance models in various countries and IOC. Furthermore, this study empirically offers a comparison of the NOC model in managing oil and gas, and the advantages and disadvantages of institutional selection over the oil and gas administrationKeywords: Energy Policy, Oil Sector Performance, National Oil Company, GovernanceJEL Classifications: Q43, O13, O38DOI: https://doi.org/10.32479/ijeep.7458
Highlights
Indonesia is very dependent on oil and gas for the continuity of a growing national economy and industry (Eifert, 2003; Ardiansyah et al, 2012)
The gap between demand and oil production capacity is predicted to increase along with increasing national demand and development. This condition has worsened with the fact that petroleum reserves and production have continued to decline since the peak of oil production in 1995 which reached 1.6 million barrels per day
Assuming there is no discovery of new petroleum reserves, the age of Indonesia’s petroleum is only about 12 years based on proven reserves
Summary
Indonesia is very dependent on oil and gas for the continuity of a growing national economy and industry (Eifert, 2003; Ardiansyah et al, 2012). Some related institutions in the Oil and Gas Law are the Ministry of Energy and Mineral Resources, the Executive Agency for Oil and Gas (BP Migas), Downstream Regulatory Activities (BPH Migas) and Pertamina This problem becomes more important when BP Migas is declared constitutional by the Constitutional Court. This is a question about the withdrawal of the same employment contract as long as the Oil and Gas Law mandate is a maximum of 30 years and can be extended by a maximum of 20 years contract consisting of periods of exploration or exploitation Referring to this condition, oil regulation and gas governance in Indonesia will have consequences and adaptations related to changes in reserves, the availability of oil and gas supply in Indonesia and the cancellation of some provisions of the Oil and Gas Law No 22 of 2001 by the Constitutional Court. This paper is expected to be a blueprint for Indonesia’s oil and gas arrangements in the future, especially in terms of increasing lifting capabilities, exploration and exploitation of oil and gas by national companies and its policy concepts that can fulfill a sense of justice for all oil and gas players in the market
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