ESDM prepares new rules to incentivise non-conventional oil and gas

Tangerang, Banten — The Ministry of Energy and Mineral Resources (ESDM) is drafting new rules to provide incentives to accelerate the development of non-conventional oil and gas (MNK).

“We are trying to revise several regulations that will allow us to accelerate MNK development,” said Laode Sulaeman, Director General of Oil and Gas at the ESDM Ministry, when met on the sidelines of IPA Convex in Tangerang, Banten, on the evening of Wednesday 20 May.

Laode explained that the ESDM Ministry has discussed plans to provide incentives to accelerate MNK development.

He aims for the rules to be completed this year in the form of a ministerial decree (kepmen). Currently, Laode notes, the government already has a kepmen governing MNK development.

“But there are a few things we need to revise to strengthen our support for Pertamina,” he said.

The ESDM Ministry, he continued, has also held meetings with Pertamina as the state-owned enterprise that will develop MNK in Indonesia.

“We are only starting to develop MNK, and Pertamina needs early-stage support. There will be incentives and conveniences, and we will back that,” Laode said.

In the interview, Laode highlighted the United States’ capacity to produce oil in the long term and at high volumes, a capacity underpinned by MNK. The United States, Laode said, has been developing MNK for a long time, and Indonesia also wants that.

“Unconventional oil and gas is indeed our future flagship. We see that their biggest production comes from MNK, the United States. We want that too,” he said.

Oki Muraza, Vice President Director of PT Pertamina (Persero), revealed that Indonesia has resource potential of up to 11.3 billion barrels of oil in place (BBO) for MNK development. Oki believed the finding is a windfall amid the end of the ‘easy energy’ era, defined as increasingly limited access to conventional oil resources and the need for oil companies to innovate and utilise technology.

Currently, Oki said, the government’s job is to present regulations and competitive fiscal policies to support MNK development.

“Next, we will invite partners and companies to create an ecosystem similar to the Permian Basin (in the United States),” he added. He also noted that human resources development is a priority for Pertamina to ensure Indonesia is increasingly ready for MNK development.