Guidelines to Increasing Oil and Gas Production

The government expects oil and gas contractors to support the acceleration of oil and gas development and production, as would be suggested by Minister of Energy and Mineral Resources Regulation No. 6 of 2010 on the Guidelines for Policy of Oil and Gas Production Increase. Essentially, the regulation endeavors contractors to develop and re-operate potential oil and gas fields that have not yet been exploited or could be exploited further.

Contractors are given 14 calendar days after the issuance of this regulation to formulate an inventory of (a) fields with potential for exploitation, and (b) those that are no longer producing, and to report the results to the Upstream Oil and Gas Supervisory Agency, or ‘BP Migas’.

No longer than 90 days after making the inventory, contractors must submit a report to the Minister of Energy and Mineral Resources (via BP Migas) on their plan to develop new fields and re-invigorate production from older fields or wells. Development cooperation with other parties is encouraged so long as any joint ventures secure Ministerial approval. 

Contractors are obliged to accelerate field development (i.e., meet the targets set out by the State Revenue and Expenditure Budget), and file suggestions to BP Migas regarding the development of newfound reserves. Newfound reserves must be reported to the Minister of Energy and Mineral Resources, and within 90 days of discovery, contractors are obliged to submit a field development plan to the Minister. Within 180 days of approval, development activity must be underway; production should be in full swing within two years of approval.

To support contractors in their obligations, BP Migas and the Directorate General of Oil and Gas are responsible for accelerating the licensing process, coordinating state agencies to efficiently support oil and gas development, formulating necessary regulations, along with other responsibilities set out by Sections 2 and 3 of this regulation

This regulation is aligned with others that actually determine the extent of domestic demand for oil and gas resources, and prioritize domestic distribution accordingly. Contractors must first meet their domestic supply obligations before exporting or otherwise utilizing their oil and gas production; the regulation mandates that this be the supreme consideration for contractors, BP Migas, the Directorate General of Oil and Gas. See: ILB No. 1301 04/02/2010 on Domestic Prioritization of Oil and Gas.

This Regulation repeals and replaces any previous Ministerial regulations that contradict the provisions of this regulation, and has been in force since 2 February 2010.