Debate Surrounds Oil and Gas Bill: SKK Migas Role May Be Replaced by Special Business Entity, Ministry of Energy Responds
The Ministry of Energy and Mineral Resources (ESDM) has responded to the ongoing discussions regarding the revision of the Oil and Gas Bill, which is intended to replace Law No. 22 of 2001.
A significant highlight of the proposed bill is the formation of a new Special Business Entity (BUK), which would hold authority over oil and gas working areas in Indonesia. This entity is expected to take over the role currently held by the Special Task Force for Upstream Oil and Gas Business Activities (SKK Migas).
Deputy Minister of Energy Yuliot Tanjung stated that the planned formation of the BUK is a response to a Constitutional Court (MK) decision. He noted that if the BUK is established, the transition of roles from the existing SKK Migas would require a transition period. “We will see how the implementation goes. How the existing SKK role will function and how the BUK will operate—we will certainly have a transition period. We will observe this first,” Yuliot explained at the DPR RI Building in Jakarta.
Furthermore, Yuliot indicated that if the BUK is formed, the entity would report directly to President Prabowo Subianto. “From the information I have just received, the plan is for the BUK to be directly responsible to the President,” he added.
As the Oil and Gas Bill is a parliamentary initiative, Yuliot clarified that the government has not yet received or reviewed the draft. The Ministry still needs to study the specific plans for the BUK’s formation as outlined in the bill.
Previously, Member of Commission XII of the House of Representatives (DPR RI), Eddy Soeparno, stated that the provision for forming the BUK was proposed in the draft to provide legal certainty. He noted that this institutional change is a response to the Constitutional Court mandate, which had invalidated several articles in the previous regulations since 2012.
“This has been a long-standing concern for us. The revision is necessary because it has been a mandate from the Constitutional Court to revise several articles that were overturned. Therefore, we feel it is a very important time to revise the Oil and Gas Law,” he told CNBC Indonesia.
The BUK is designed to be a business entity with the authority to manage upstream operations while also acting as a regulator. Unlike SKK Migas, the new institution is proposed to operate under the direct coordination of the President to streamline bureaucracy. Eddy added that the BUK would hold working areas across Indonesia, and any parties wishing to participate in the upstream sector would need to collaborate with this entity. The House aims to complete the regulatory discussions by October 2026.
Meanwhile, Deputy Chairman of Commission XII, Bambang Haryadi, emphasised that SKK Migas was originally formed only to fill a temporary legal vacuum. He stated that the Oil and Gas Bill serves as a long-term solution to unify the functions of state control and business exploitation in accordance with the constitution.
“The Oil and Gas Bill has been discussed since 2015. Following the Constitutional Court ruling in late 2012 that dissolved BP Migas because it was deemed unconstitutional, Presidential Regulation No. 9 of 2013 was issued to fill the legal vacuum by forming SKK Migas,” said Bambang.
Bambang noted that the fundamental difference in the latest draft lies in the state’s full control over all oil and gas business activities. “The goal is clearly to implement the Constitutional Court’s decision. The key point is that control and exploitation must be managed by the state. Law 22/2001 separated control from exploitation, but this Bill unites them as per the court’s ruling.”
He added that strengthening the legal foundation through this new law is expected to boost the investment climate in the upstream sector, as institutional governance certainty is seen as key to increasing national oil production levels.