This new Draft Regulation is set to significantly expand Indonesia?s oil-and-gas, data-governance regime through the extension of mandatory data classification, submission, confidentiality and utilization requirements to Target Injection Zone (Zona Target Injeksi/ZTI) exploration and carbon-storage activities. The new Draft Regulation will also modernize the licensing framework through a centralized online system and will introduce an automatic approval mechanism for data utilization permits, thereby reducing administrative uncertainty and accelerating regulatory processing in relation to carbon capture and storage-related business activities.

This Circular reinforces a number of existing regulatory frameworks that apply within the mineral and coal-mining sector by prohibiting various types of mining permit holders (i.e. those currently in the middle of the exploration and the operation production stage) from engaging in any physical field activities (e.g. exploration, construction, production and sales) without first securing approvals for their Work Plans and Funding Budgets (Rencana Kerja dan Anggaran Biaya/RKAB).

Cooperation-contract contractors (Kontraktor Kontrak Kerja Sama - ?KKKS?) that engage in profit-sharing contracts under the return of operational cost mechanism (?Cost Recovery KKKS?) must now draft applications and secure approvals from the Special Task Force for Upstream Oil and Gas (Satuan Kerja Khusus Pelaksanaan Kegiatan Usaha Minyak dan Gas Bumi ? ?SKK Migas?) for master agreements as a derivative of the relevant Memorandum of Understanding (MoU) established by SKK Migas. Said master agreements should be drawn up with providers of goods/services, will govern long-term cooperation and will have a validity of between three and five years.

If enforced, then this Draft Bill will ultimately restructure the current oil-and-gas regime business regime by establishing the Special Oil-and-Gas Business Entity (Badan Usaha Khusus Minyak dan Gas Bumi ? ?BUK Migas?), which will have authority over Indonesia?s oil-and-gas mining sector, particularly upstream business activities. BUK Migas will engage in upstream business through cooperation contracts (Kontrak Kerjasama/KKS) and may offer mining work areas to business entities or permanent establishments (Bentuk Usaha Tetap/BUT) if it lacks the capacity to handle them itself.

The smelter construction program that features on the list of Indonesia?s National Strategic Projects (Proyek Strategis Nasional/PSN) has been retained, however, the integrated alumina processing and refining facilities project has now been expanded from separate bauxite processing into an entire integrated aluminium ecosystem that encompasses supporting facilities, an aluminium smelter, a power plant and upstream supply chain activities. All of these elements will be concentrated in a single industrial location in West Kalimantan.

While maintaining the majority of aspects related to the issuance of groundwater utilization approvals (?Utilization Approvals?) that initially featured under Regulation of the Minister of Energy and Mineral Resources No. 14 of 2024, this new Regulation sets out a comprehensive formula that should be used in order to calculate administrative fines, specifically in relation to arrangements (penataan) of Utilization Approvals. The newly applicable fines should be calculated by multiplying the relevant progressive withdrawal volume by the fine tariff, coefficient and duration of the relevant violation.

The Draft Regulation now incorporates costs that derive from the organization of Carbon Capture and Storage (CCS) or Carbon Capture, Utilization and Storage (CCUS) activities (e.g. closure and monitoring costs) on the list of other operational costs of Contractors. Under the new framework, said Contractors will also remain entitled to enjoy certain types of taxation facilities during the exploration and exploitation stage up until the start of any commercial production. However, the Draft Regulation stipulates that these taxation facilities will also extend to Contractors during the exploitation stage, all the way through commercial production, right up until the end of cooperation contracts.

If it is ultimately enforced, then this Draft Regulation will further clarify certain aspects relating to electrical power supply businesses, be they publicly or privately owned, and will also incorporate electric motorized vehicle (Kendaraan Bermotor Listrik/KBL) charging businesses onto the official business list. The Draft Regulation will also introduce so-called ?environmental attributes?, which will apply to holders of business permits for supplies of electrical power through new and renewable energy power plants, as well as a detailed set of administrative fines that can be imposed in response to non-compliance.

This Regulation introduces mandatory Indonesian Sustainable Palm Oil (?ISPO?) Certification for all palm oil-based bioenergy companies and officially comes into force on 20 March 2027. This new framework extends the current ISPO sustainability regime beyond the plantation and downstream sectors to encompass bioenergy products, corporate governance practices and global supply chains. The new certification framework is founded on three principal pillars, specifically compliance with applicable Laws and Regulations, supply chain traceability and the enhancement of ongoing business sustainability. Compliance with these pillars will be evaluated through various administrative assessments and on-site audits, while non-compliance will be subject to the imposition of administrative sanctions.

Energy conservation service businesses (?Conservation Services?) may now be organized by legal entities and government agencies for energy provider and user customers based on the following types of activities: 1) Implementation of Investment Grade Energy Audits (IGEA); 2) Financing of Energy Efficiency Projects; 3) Implementation of installation work and/or construction, as well as monitoring and supervision of Energy Efficiency Projects; 4) Operation, maintenance and repair of energy installations; and 5) Measurement and verification of energy performance. Furthermore, these Conservation Services may also be implemented based on six business models, which include: 1) Guaranteed savings; 2) Shared savings; 3) Build, operate and transfer (BOT); 4) Build, operate and own (BOO); and 5) Energy as a service (EaaS).