Difficult Discussions Over Oil and Gas Bill, Experts Offer Advice

Discussions regarding the revision of the Oil and Gas Bill (UU Migas) remain difficult. One of the key issues under consideration is the plan to establish a Special Business Entity (BUK) for oil and gas.

The debate involves the form and position of the BUK Migas within the government’s institutional structure. Several options have emerged, including placing the BUP Migas directly under the President, under PT Pertamina (Persero), or under the Ministry of Energy and Mineral Resources (ESDM).

Komaidi Notonegoro, Executive Director of the ReforMiner Institute, noted that based on the circulating draft of the Bill, the BUK Migas is designed as a special business entity or a special State-Owned Enterprise (SOE) primarily tasked with managing upstream oil and gas activities.

“In the existing draft, BUK Migas is a special business entity or a special SOE that manages the upstream sector,” Komaidi told CNBC Indonesia.

According to Komaidi, the concept of BUK Migas shares similarities with previous institutions used in upstream oil and gas management. Before the formation of BP Migas and subsequently SKK Migas, these functions were part of Pertamina’s structure.

“Its position might be similar to when there was a BBPKA within a Pertamina unit or directorate, which later reincarnated as BP Migas under Law 2/2001, and after being annulled by the Constitutional Court, became SKK Migas. Thus, its task is specifically to handle the upstream sector, namely exploration and production,” he said.

Furthermore, the BUK Migas concept bears some resemblance to Danantara, particularly in terms of management functions. However, the scope of BUK Migas will be much more specific, focusing on the upstream oil and gas sector.

“Is it similar to Danantara? Danantara is actually higher up, acting as an overall conductor. There might be some similarities with Danantara Investasi, but specifically for the upstream oil and gas sector, where it will work with partner contractors and can operate independently,” he added.

Meanwhile, oil and gas practitioner Hadi Ismoyo believes the new BUK Migas should possess stronger authority than previous upstream management institutions.

“The new BUK will be more powerful than its predecessors,” he said.

Hadi noted that he had proposed this idea during an interview process in 202/3. He believes that if necessary, BUK Migas could be granted the authority to handle both the upstream and downstream sectors simultaneously.

“If required, it could handle both upstream and downstream at once, and the new BUK Chairman would be responsible to the President with a dotted line to the relevant Ministry,” he stated.

He argued that such an institutional design is necessary to strengthen the position of BUK Migas and support the broader goal of strengthening national energy security.

At the very least, the individuals selected to lead the BUK Migas organisation must be competent and neutral. This is crucial to prevent conflicts of interest in the execution of the institution’s functions.

“The goal is to strengthen national energy security. The organisation must be composed of professional and neutral individuals; the referee must not also be a player, so that the BUK becomes a professional, world-class entity,” he said.

Previously, Member of Commission XII of the Indonesian House of Representatives (DPR RI), Ratna Juwita Sari, stated that her party is awaiting the government’s official stance through the Government Explanation Note (DIM) before determining a further view on the BUK Migas design.

“As for us, we have observed that the special business entity for oil and gas should be managed professionally. Currently, the business entity already exists, so there is no need for another regulator,” she said when met at the DPR RI building on Tuesday.

She noted that BUK Migas would act on behalf of the state in managing the oil and gas sector. Therefore, she chose to wait for the government’s DIM before taking a definitive stance on the form and position of the institution.

When asked whether BUK Migas should fall under the Ministry of ESDM, Pertamina, or directly under the President, Ratna declined to comment further.

“Ahahaha, no comment, no comment. I’m afraid of being wrong,” Ratna said with a laugh.