"Aligning Oil and Gas Law with Energy Law"

Aligning of Oil and Gas Law with Energy Law 

By : Sampe L. Purba

Law No. 30 of 2007 (Energy Law) is a basis - both as the main upstream source and the end stream - of Indonesia's energy policies. This law includes the normative recognition and regulation on energy as the means for economic activities and national resilience. 

As the upstream, this law covers both the non-renewable energy such as the hydrocarbon (oil, gas, or coal), and the renewable energy such as nuclear, geothermal, solar, wind and hydro (waterfall) energy. 

As the downstream, Energy Law regulates the management of energy, including the supply, utilization, and operation in a fair, sustainable, rational, optimized, and integrated manner. 

This law also broadly governs energy regulation, energy buffer reserves, and energy prices, as well as created a new institution named the Indonesian National Energy Council (Dewan Energi Nasional - DEN). The main task of DEN is to design and formulate national energy policies to be endorsed by the government upon the legislative's approval. 

Government Regulation No. 79 of 2014 concerning National Energy Policy transforms the paradigm on energy as the main income to be the driver of development capital. The messages from the National Energy Policy are firmly asserted.

 Firstly, energy independence and resiliance shall be achieved by making energy as the national development capital. Secondly, optimizing energy utilization for national economic development, domestic value adding, and manpower absorption. 

What about the Oil and Gas Law? 

The Oil and Gas Law ( Law No. 22 of 2001) that was born preceding its parent (Energy Law), apparently has different accentuation. This law exists as a response to demands for reformation. This law slightly degrades the role of oil and natural gas which in the previous law (Law No. 44 of 1960) positioned oil and natural gas as defense instruments as well. 

At present, oil and natural gas have solely become the strategic natural resources and vital commodity. The Agency for Upstream Oil and Gas Management (BPMIGAS) was established as a new institution implementing the government's managerial authority in contractual relations with upstream oil and gas investors.