Jakarta — 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 approved as a legislative initiative of the House of Representatives (DPR) on Tuesday, 18 August 2026. The approval followed a harmonization meeting between the DPR’s Legislative Body (Baleg) and Commission XII on 15–16 August 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.
“Most of the problems in the oil and gas sector are fundamentally issues of transparency and accountability. These principles must be locked into the law itself. This is particularly important given that several provisions directly concern issues such as the content and disclosure of contracts, the management of Non-Tax State Revenue (PNBP), oil and gas funds, and revenue sharing,” said PWYP Indonesia National Coordinator Aryanto Nugroho.
The findings of the 2024 Extractive Industries Transparency Initiative (EITI) Indonesia Validation further underscore the urgency of these reforms. 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 had not yet been fully disclosed.
“That score is evidence that transparency can no longer be left to ministry portals or annual company reports. The Oil and Gas Bill must make disclosure mandatory,” Aryanto said.
Aryanto stressed that the oil and gas sector is particularly 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 clarity over who is authorized to trade oil and gas owned by the state, these gaps can repeatedly become spaces 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 urged.
Contracts and Working Area Bidding
Aryanto noted 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 responsibilities—must be accompanied by mandatory contract disclosure.
PWYP Indonesia also considers the current upstream contractual regime ambiguous, 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, and so have the obligations concerning transparency.
“This ambiguity must be resolved through the Oil and Gas Bill. A contract must remain a contract. A license must remain a license. Both must be disclosed rather than merged under a single administrative label,” Aryanto said.
In addition, the designation and bidding of oil and gas working areas must not be isolated 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 bidding process merely organizes transactions at the central level without preventing conflicts at the local level.
State Revenue and the Rights of Producing Regions
Article 48 paragraph (1) of the draft Oil and Gas Bill states that producing contractors “shall only be required to pay income tax, land and building tax, and non-tax state revenue.”
Aryanto called for the word “only” to be removed, as it could potentially eliminate obligations to pay regional taxes and levies.
The Oil and Gas Bill must also avoid repeating the longstanding pattern in which producing regions bear the burden of production and socio-environmental risks while receiving a disproportionately small share of the benefits. Distributive justice must be secured through an adequate increase in the revenue-sharing ratio under the Revenue Sharing Fund (DBH), with its management subject to transparency requirements at the statutory level.
Furthermore, the Oil and Gas Bill needs to strengthen reforms in the governance of Participating Interest (PI), which provides producing regions with the right to participate in upstream oil and gas management. Oil and gas PI must be managed through accountable and publicly transparent regionally owned enterprises (BUMD). The objective is to ensure that regions genuinely participate in governance—including oversight and technology transfer—rather than simply becoming recipients of rents managed by third parties.
Post-Operation Environmental Restoration (ASR)
PWYP Indonesia calls for obligations concerning environmental restoration and Abandonment and Site Restoration (ASR) to be firmly established in the Oil and Gas Bill rather than merely delegated to ministerial or other implementing regulations. The Bill must specifically establish the rules governing ASR: mandatory funds must be set aside from the beginning of operations, related reports must be publicly accessible, and the funds must be subject to regular independent audits.
The urgency of this issue is underscored by findings from the Audit Board of the Republic of Indonesia (BPK), which identified significant weaknesses in the management of post-operation funds. In its Second Semester Audit Results Summary (IHPS II) 2025, BPK recorded weaknesses in ASR fund controls, findings concerning unaccounted-for use of funds, and significant risks that could ultimately leave the state responsible for shortfalls in restoration funding in several working areas.
“ASR funds are not idle cash, nor are they merely technical costs for well closure. 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—and especially producing regions and new contractors—must not be forced to bear the ecological legacy of previous contractors,” Aryanto stressed.
Community Rights and Livelihoods
PWYP Indonesia firmly rejects land acquisition provisions that place the smooth operation of upstream activities above 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 not 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 simply refer to 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 lifting. The law must establish norms requiring contractors to internalize climate mitigation costs, reduce emissions—including methane—in measurable and reportable ways, and prepare post-operation plans aligned with the transition in producing regions.
Climate justice must go beyond emissions figures. The Oil and Gas Bill must ensure that producing regions, workers, and communities at extraction sites do not bear the costs alone once 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 desks,” Aryanto said.
Oil and Gas Governance Institutions
With regard to 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 institutional overlaps in oil and gas trading. Beyond the proposed BUK and the downstream regulatory body (BPH), the government has opened opportunities for oil and gas imports through public service agencies (BLUs), including Lemigas, under Presidential Regulation No. 26 of 2026, while also preparing an Energy Sector BLU to facilitate the provision of natural gas for electricity generation.
“If the new Oil and Gas Bill does not clearly define who is authorized to manage and trade state-owned gas, the state will have many desks but no single accountable command. The Bill must close this gap,” Aryanto concluded.
PWYP Indonesia is a civil society coalition advocating for democratic and inclusive governance of the energy and natural resource sectors to advance social and ecological justice.
Media Contacts
Aryanto: [email protected]
Ariyansah NK: [email protected]