Government Prepares Special Agency for Oil and Gas, Reporting Directly to President

The Minister of Energy and Mineral Resources, Bahlil Lahadalia, has stated that the Special Oil and Gas Business Agency (BUK Migas), currently being prepared by the government, will be positioned under the direct responsibility of President Prabowo Subianto.

Bahlil noted that the formation of BUK Migas is part of the discussions regarding the Oil and Gas Bill (RUU Migas), which will be conducted by the government alongside the House of Representatives (DPR) once the Presidential Letter (Surpres) regarding the bill’s discussion is issued.

“I will convey this during the Law discussions. However, the institution will be under the direct responsibility of the President, and that is clear and not up for debate,” Bahlil said at the Presidential Palace Complex in Jakarta on Thursday.

According to Bahlil, the government is now focused on finding a regulatory formulation that can strengthen BUK Migas, particularly regarding licensing. This initiative is intended to ensure that cross-sectoral licensing processes do not become an obstacle to increasing national oil and gas production, or lifting.

“We do not want cross-sectoral licensing to become a hindrance to increasing our lifting,” he said.

Nevertheless, Bahlting emphasised that the strengthening of BUK Migas will not diminish the authority of relevant ministries to carry out licensing processes in accordance with applicable regulations.

“Without reducing the processes as they should be within the authority of each respective ministry,” Bahlil explained.

In addition to licensing, Bahlil stated that BUK Migas will be encouraged to have flexibility in conducting negotiations with both the private sector and the government. This flexibility includes cooperation schemes for oil and gas management, such as cost recovery mechanisms or other forms of partnership deemed beneficial to both the government and private entities.

“So, we will still proceed with this, but we will push for the model and flexibility in negotiations with the private sector and the government, whether through cost recovery or other forms that can be mutually beneficial,” he clarified.

Bahlil emphasised that he could not yet explain in detail whether BUK Migas would replace or alter the institutional structure of the Special Task Force for Upstream Oil and Gas Business Activities (SKK Migas).

“I cannot answer that far yet, but I can say that this special business agency will be under the direct responsibility of the President,” he concluded.