Indonesian Center for Environmental Law (ICEL) and PWYP Indonesia held hearings with Oil and Gas Governance Reform Team based in Plaju, South Jakarta. In this meeting, civil society explained the background of revision of Oil and Gas Act 2001 as well as main aspects of its oil and gas bill.
Revision of Oil and Gas Act 2001 were triggered by several reasons, as explained by the representative of civil society, 1) Oil and Gas Act 2001 introduced new institution, named Upstream Oil and Gas Regulatory Body (BP Migas) and held state-owned legal entity status, so that it can’t perform business activity; 2) Oil and Gas Act 2001 caused natural resources mismanagement leading to failure to make oil and gas industry as main source of national energy security, 3) National energy policy tends to focus per sector (sectoral) and revenue oriented, not in the spirit of energy security, 4) Oil and Gas Law Act ignored downstream activity and focused on upstream activity.
Therefore, the representative from ICEL and PWYP Indonesia proposed alternatives rules to solve the problems caused by Oil and Gas Act 2001 through its Oil and Gas Bill. Additionally, they also attempted to accommodate environmental protection, transparency principle, and public participation into the bill. Firstly, on the management planning, three points proposed; 1) comprehensive approach on downstream and upstream industry, 2) synchronization of related government policy with national energy needs, 3) harmonization of oil and gas policy with other sectors, including environment and spatial planning.
Secondly, related to the institutional model, there are three functions: 1) regulation function, comprised of two points, including regulation and law making and licensing, 2) management function, should be done by state owned enterprise, 3) monitoring function, done by monitoring body consisted of five members representing government entities, state owned enterprise, civil society, academics and private entities.
Petroleum fund is also regulated in the bill. This fund aims to diversion of fossil energy to clean and renewable energy; build oil and gas infrastructure such as refinery, gas distribution network and natural gas terminal; activity related to the search of new oil and gas reserves. Furthermore, it is important to govern domestic market obligation (DMO), notably to prioritize it for national needs and establish its amount every five years.