Indonesia plans easier oil, gas permits and exploration tax relief

There must be clear, definitive certainty regarding licensing,

Jakarta (ANTARA) - Indonesia is seeking to simplify its upstream oil and gas regulations through a one-stop licensing system and exploration tax relief to cut bureaucracy and attract investment.

Energy and Mineral Resources Minister Bahlil Lahadalia said the proposed reforms are outlined in the draft Oil and Gas Bill, which would authorize a Special Business Entity (BUK) to manage permits on behalf of contractors under production sharing contracts (PSCs), known locally as KKKS.

Speaking at the opening of the 2026 Upstream Oil and Gas Economic, Financial and Commercial Forum in Jakarta on Wednesday (October 28), Bahlil criticized the administrative hurdles that have delayed exploration and licensing.

“I do not want a situation where, after winning a tender, a contractor still has to go on a round-trip from one ministry to another to secure permits,” he said in a statement.

“That is what causes the delays—both in exploration and in the licensing process itself,” he added.

Under the proposed BUK mechanism, successful bidders would be able to process their permits through a single point of contact instead of dealing with multiple ministries individually.

Bahlil said discussions on the list of inventory of issues (DIM) for the Oil and Gas Bill were 90 percent complete, with provisions strengthening the BUK’s authority among the key issues being finalized.

He stressed that regulatory certainty was essential for investors considering high-risk upstream projects.

“One of the fundamental requirements for business players is certainty. Regulations should not be convoluted. There must be clear, definitive certainty regarding licensing,” he said.

The draft legislation also proposes tax relief for exploration-stage contractors that have yet to begin production. Under the proposed arrangement, tax payments could be deferred until operations generate commercial results.

“If there are no results, what is there to pay? However, if there are results, one must not fail to pay—that would also be wrong on our part,” Bahlil said.

He said the arrangement was intended to ease the financial burden during high-risk exploration while maintaining tax obligations once commercial results were achieved.

Separately, Bahlil urged oil and gas operators that had completed exploration and obtained Plan of Development (PoD) approvals to accelerate project implementation.

Faster development, he said, was needed to increase national oil and gas lifting and reduce Indonesia’s reliance on energy imports.

Through streamlined licensing, proposed tax deferrals and faster project development, the government aims to improve the investment climate and strengthen national energy security.

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Translator: Aria Ananda, Yashinta Difa
Editor: M Razi Rahman
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