New Contract Schemes for Unconventional Oil and Gas

The Minister of Energy and Natural Resources (“Minister”) has issued Regulation No. 38 of 2015 on the Acceleration of Unconventional Oil and Gas Business (“2015 Regulation”). In a bid to accelerate the development of non-conventional oil and gas in Indonesia, the 2015 Regulation sets out new contract schemes for oil and gas businesses.[1]

The 2015 Regulation is of relevance to oil and gas companies which are currently or which intend to be involved in non-conventional oil and gas activities.

Unconventional Oil and Gas

Unconventional oil and gas consists of resources which are extracted from low permeability reservoirs or pools, including shale oil, shale gas, tight-sand gas, coal-methane gas, and methane-hydrate.[2] The International Energy Agency also lists other types of unconventional oil and gas, such as extra-heavy oil, natural bitumen (oil sands), kerogen oil, gas-to-liquids (GTL), coal-to-liquids (CTL) and additives.[3] These types of oil and gas are to be processed using technologies such as fracturing.[4]

New Contract Schemes

The 2015 Regulation describes two new contract schemes for the development of unconventional oil and gas resources, namely: