Upstream Oil and Gas Industry Needs Legal Certainty? Law Revision Must Be Priority
TANGERANG – The challenges of energy transition and long-term investment needs in the upstream oil and gas industry must be underpinned by robust regulations. Therefore, the revision of the Oil and Gas Law should be promptly concluded to provide the national oil and gas industry with long-term guidance and certainty.
Purnomo Yusgiantoro, Special Presidential Advisor for Energy, stressed the need for new regulations to ensure Indonesia’s oil and gas sector can adapt to future industry developments while providing certainty for businesses.
‘We hope to have a new oil and gas law and regulations,’ Purnomo said during the Plenary Special Session – Reflection on Indonesia’s Future Energy Policy Strategies at IPA Convex 2026 in ICE BSD on Thursday, 21 May 2026.
Purnomo noted that Indonesia’s energy regulatory system is already quite robust, with a layered structure from the 1945 Constitution, laws, down to technical regulations at ministry and agency levels.
He explained that strategic regulations are then translated into tactical measures through various implementing rules such as Ministerial Regulations, SKK Migas Regulations, and BPH Migas Regulations.
‘It’s actually quite good already. But hopefully, with a new Oil and Gas Law, we can make adjustments for the next 20 years,’ Purnomo said.
Beyond regulations, Purnomo emphasised the importance of balancing government interests and investor needs to keep the oil and gas industry attractive to businesses.
‘The key is how we balance government and private sector needs,’ he said.
According to him, oil and gas investors fundamentally require a competitive rate of return due to the high risks and uncertainties in exploration. ‘The private sector always asks for a good return because they’re facing exploration risks and uncertainties,’ he said.
Kardaya Warnika, former head of BP Migas from 2005 to 2008, argued that the main issue facing Indonesia’s upstream oil and gas industry is not resource potential, but weak legal certainty causing investors to hold back expansion.
He noted many oil companies are relocating investments to countries like Vietnam and Myanmar due to more certain regulations.
‘Is the potential there better than Indonesia? The answer is similar. Indonesia’s potential is far superior. So why move there? Because of legal certainty. That’s it,’ Kardaya said.
Meanwhile, Hilmi Panigoro, President Director of Medco Energy, highlighted three key issues in the national oil and gas industry: the importance of legal certainty and contract sanctity, the need for fiscal flexibility to maintain project economics, and the industry’s future amid energy transition.
He said the government’s stance indicates increasingly positive policy direction for the national oil and gas investment climate. ‘I fully agree with what Mr Kardaya said. Contract sanctity and legal certainty,’ Hilmi said.