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Indonesia Scraps Energy Regulation Hoping To Attract $50B In Investments

Indonesia has scrapped a total of 186 energy regulations and permit requirements, hoping to make its energy sector more attractive as it seeks to lure as much as US$50 billion in investments to offset the decline in its mature oil and gas fields.

“This is important, as was instructed by the president; we have to be business- and investment-friendly to increase employment and boost economic growth,” Indonesia’s Energy and Mineral Resources Minister Ignasius Jonan said, as quoted by Jakarta Globe.

The energy and mineral resources ministry is revoking 90 general regulations and 96 other rules related to permits and certification requirements in an effort to cut the red tape and provide a more investor-friendly climate in its energy sector, including oil and gas, minerals, coal, and renewables.

“We hope the cuts will have a quick impact, so that the business world will experience a better, less bureaucratic service,” Jakarta Globe quoted Jonan as saying.

Last year, Indonesia revised the terms of its production sharing contracts (PSCs) to make them more attractive for investors, just months after it launched the PSC-scheme for oil contracts. Nevertheless, experts still thought that Indonesia needed to change the regulatory and fiscal regimes to become an attractive destination for oil and gas development in the current oil price environment.

The local units of large international companies have also called upon Indonesia to cut the red tape in order to cut production costs for international investors.

Last month Indonesia said that it was seeking bids for 24 conventional oil and gas blocks. Its deputy energy minister Arcandra Tahar told Bloomberg that the country hoped to lure “the big boys” such as Exxon, Chevron, and BP, to bid.

“We will try to show them we have a new policy, a new fiscal regime, that’s going to be much better than the previous one,” Tahar told Bloomberg last month.

By Tsvetana Paraskova for Oilprice.com

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