JURNALTODAY.CO, NATIONAL – The Publish What You Pay (PWYP) Indonesia Coalition has raised concerns over several provisions in the Draft Oil and Gas Law (Oil and Gas Bill), which was agreed upon as an initiative of the House of Representatives (DPR) on Tuesday, August 18, 2026. The agreement followed harmonization meetings between the DPR’s Legislation Body (Baleg) and Commission XII on August 15–16, 2026.
The PWYP Indonesia Coalition believes that replacing the existing Oil and Gas Law will only constitute meaningful governance reform if transparency and accountability are firmly established at the statutory level, rather than deferred to implementing regulations.
“Many of the problems in the oil and gas sector are fundamentally about transparency and accountability. These principles must be locked into the law itself. Several provisions directly concern issues such as contract disclosure, the management of non-tax state revenue (PNBP), oil and gas funds, and revenue-sharing funds (DBH), for example,” said Aryanto Nugroho, National Coordinator of PWYP Indonesia.
The findings of the 2024 Extractive Industries Transparency Initiative (EITI) Indonesia Validation further underscore the urgency of this issue. The EITI International Board gave Indonesia a score of 67 out of 100, classified as “fairly low,” with transparency identified as the weakest component. One of the key findings was that contract and licensing documents have not been fully disclosed.
“That score is proof that transparency can no longer be left to ministry portals or companies’ annual reports. The Oil and Gas Bill must make disclosure mandatory,” Aryanto said.
Aryanto emphasized that the oil and gas sector is highly vulnerable to corruption. Contract values are substantial, supply chains are complex, and discretion over allocation and pricing is often opaque.
Without mandatory publication of contracts, cost audits, and clear rules on who is authorized to trade state-owned oil and gas, these vulnerabilities can repeatedly become opportunities for abuse—from procurement and intermediaries to the management of state revenues.
“The new bill must not reproduce an architecture that perpetuates these vulnerabilities,” Aryanto stressed.
Contracts and Working Area Offers
Aryanto said that production sharing contracts and other cooperation contract documents have historically lacked transparency and have been difficult for the public to access. The Oil and Gas Bill must not repeat this pattern. Minimum contractual provisions—including environmental obligations, community development, respect for Indigenous peoples’ rights, and post-operation obligations—must be accompanied by mandatory contract disclosure.
PWYP Indonesia also considers the upstream contract regime to be unclear, particularly following the enactment of the Job Creation Law. Business activities are placed under business licensing, while upstream activities continue to be governed through cooperation contracts. Subsequent implementing regulations have treated contracts as a form of licensing within the Online Single Submission (OSS) system. As a result, the distinction between licenses and contracts has become blurred, along with the corresponding transparency obligations.
“This ambiguity must be resolved in the Oil and Gas Bill. A contract must remain a contract. A license must remain a license. Both must be disclosed, rather than being merged under a single administrative label,” Aryanto said.
In addition, the designation and offering of working areas must not be insulated from public participation. The Oil and Gas Bill must guarantee meaningful participation by Indigenous and local communities, including Free, Prior and Informed Consent (FPIC), before an area is designated and offered. Without such safeguards, an open tender merely organizes transactions at the central level rather than preventing conflicts on the ground.
State Revenue and the Rights of Producing Regions
Article 48 paragraph (1) of the draft Oil and Gas Bill states that contractors that have commenced production “shall only be required to pay income tax, land and building tax, and non-tax state revenue.”
Aryanto urged lawmakers to remove the word “only,” arguing that it could risk eliminating regional taxes and levies.
The Oil and Gas Bill must also avoid repeating the old pattern in which producing regions bear the social and environmental risks and contribute to national oil and gas production, while receiving a disproportionate share of the benefits. Distributive justice must be secured through an adequate increase in the Revenue Sharing Fund (DBH), with its management made transparent at the statutory level.
The bill should also strengthen reforms to the management of Participating Interest (PI), which gives producing regions the right to participate in upstream oil and gas management. Oil and gas PI should be managed through accountable state-owned regional enterprises (BUMD) and made transparent to the public. The aim is to ensure that regions genuinely participate in governance, including oversight and technology transfer, rather than merely becoming recipients of rents managed by third parties.
Post-Operation Environmental Restoration (ASR)
PWYP Indonesia urged that obligations concerning environmental restoration, or Abandonment and Site Restoration (ASR), must not simply be delegated to ministerial or implementing regulations. The Oil and Gas Bill must establish specific rules: funds must be set aside from the beginning of operations, their management and use must be publicly disclosed, and they must be subject to regular independent audits.
The urgency of this issue is reflected in findings by the Audit Board of Indonesia (BPK). In its Second Semester 2025 Audit Results Overview (IHPS II 2025), BPK identified weaknesses in the management and control of ASR funds, findings concerning unaccounted-for use of funds, and significant risks that could ultimately leave the state responsible for shortfalls in environmental restoration funding in several working areas.
“ASR funds are not idle cash, nor are they merely technical costs for plugging wells. The Oil and Gas Bill must ensure that these funds are fully used for environmental restoration, addressing socio-economic impacts in producing regions, and preparing for post-oil and gas transition.
The fundamental principle is the polluter pays principle. The state, producing regions, and new contractors must not be forced to bear the ecological legacy left behind by previous contractors,” Aryanto stressed.
Community Rights and Livelihoods
PWYP Indonesia firmly rejects provisions on land acquisition that prioritize the smooth operation of upstream activities over community rights. Provisions concerning land prioritization and acquisition, including Article 52, must establish clear mechanisms, respect the rights of Indigenous and local communities, and prevent the takeover of productive land.
“Energy security must never become a justification for the dispossession of people’s livelihoods and living spaces,” Aryanto said.
Oil and Gas, Energy Transition, and Climate Justice
In the context of energy policy, oil and gas governance cannot rely solely on the National Energy Policy (KEN). The Oil and Gas Bill must be harmonized with the Energy Law, the National Energy General Plan (RUEN), and Indonesia’s national climate commitments so that it does not become an instrument for prolonging fossil fuel dependence without a clear phase-down pathway.
PWYP Indonesia rejects an Oil and Gas Bill that focuses solely on increasing production and lifting. The law must establish norms requiring contractors to internalize climate mitigation costs, reduce emissions—including methane—in a measurable and reportable manner, and develop post-operation plans aligned with the energy transition in producing regions.
Climate justice must go beyond emissions figures. The Oil and Gas Bill must ensure that producing regions, workers, and communities on the ground do not bear the costs alone when production declines. Technologies such as Carbon Capture and Storage/Carbon Capture, Utilization and Storage (CCS/CCUS) must not be used as a justification for extending fossil fuel concessions indefinitely, without climate feasibility assessments and the consent of affected communities.
“If this bill is not aligned with fossil fuel reduction, Indonesia will only lock itself into price shocks and the climate crisis. True energy security cannot be built by adding more fossil fuel tables,” Aryanto said.
Oil and Gas Governance Institutions
Regarding the proposed Special Oil and Gas Business Entity (BUK Migas), revenues and operational budgets must be subject to strict safeguards through audit standards and public reporting. The Oil and Gas Bill must also resolve overlapping institutional mandates in oil and gas trading.
Beyond the proposed BUK and Downstream Oil and Gas Regulatory Agency (BPH Migas), the government has opened opportunities for oil and gas imports through Public Service Agencies (BLUs), including Lemigas, under Presidential Regulation No. 26/2026. The government is also preparing an Energy Sector BLU to support natural gas supply for electricity generation.
“If the new Oil and Gas Bill does not clearly define who has the authority to manage and trade state-owned gas, the state will end up with many tables but no single accountable command. The bill must close this loophole,” Aryanto concluded.
Source: Jurnal Today