Changes to the Upstream Oil & Gas Regulatory Framework

The Government has recently amended Government Regulation No. 35 of 2004 on Upstream Oil and Gas Business Activities in a desperate attempt to raise the level of national oil and gas production. This Government Regulation is clearly an attempt to avert the deepening oil and subsidy crises. The Regulation inserts 4 Articles between Article 103 and 104; namely, 103A - D.

The Regulation recognizes that there is a crisis associated with the supply of oil and gas therefore Article 103A expressly states where there is an urgent need in the national interest, and this urgent need has already been identified - to raise the level of national oil and gas production - then the following may occur: the offer of a participating interest to a Regional-owned enterprise (BUMD); return of the original investment from a profit sharing contract; revisions to the term of a joint work contract on a former Pertamina work area; and, increased profit sharing arrangements.