Promoting Investment In Indonesia’s Oil And Gas Industry.

The Indonesian Government has recently announced several different measures to seek to address the continued slide in investment in the Indonesian oil and gas industry. Among these changes is the issuance of Minister of Energy and Mineral Resources (“MEMR”) Regulation No. 7 of 2019 regarding the Management and Utilisation of Oil and Gas Data (“MEMR 7/2019”).

MEMR 7/2019, which replaces MEMR Regulation No. 27 of 2006 (“MEMR 27/2006”), aims to widen (and clarify the arrangements for) access to Indonesian oil and gas data. While the Indonesian Government has not meaningfully relinquished its ultimate authority and control over oil and gas data, MEMR 7/2019 is a step in the right direction in ensuring that oil and gas data is more widely, and more quickly, available to the industry.

MEMR 7/2019 follows other recent good news for private investment in the Indonesian oil and gas sector, including:

• the Minister of Finance issuing a new regulation last month setting out additional tax incentives for PSC contractors, 
• the discovery earlier this year of reportedly the world’s fourth-largest known gas reserve, in the Sakakemang block in South Sumatra, by Repsol and MOECO, and
• ConocoPhillips, Repsol and Pertamina being granted a 20-year extension to the Corridor natural gas block PSC. 

A number of foreign investors have also been successful in the recent PSC bidding round, showing increasing confidence in the new gross-split PSCs.

New data utilisation system

The main function of MEMR 7/2019 is to provide the legal basis for the Energy and Mineral Resources Data and Information Technology Centre (“MEMR Data Centre”) to establish a new system for non-confidential oil and gas data to be disclosed to and utilised by the public.

Under this new system, fee-paying members will be provided access to all classifications of data which are not confidential or which are no longer subject to a confidentiality period (discussed below). Non-members will also be able to use this system but will only be entitled to access “general data” and “basic data” (also discussed below) which are not confidential or are no longer subject to a confidentiality period. MEMR 7/2019 requires all PSC contractors (or their affiliated PSC contractors) to become members of this new data utilisation system.

MEMR 7/2019 states that this data utilisation system must be established by the MEMR Data Centre by no later than 1 February 2020.

Data classification, confidentiality and delivery

To assist in the implementation of the new data utilisation system and improve the access to and management of oil and gas data, MEMR 7/2019 introduces several new classifications of data which were not regulated under MEMR 27/2006. MEMR 7/2019 also regulates, for the first time, the detailed arrangements for the delivery of such data to the MEMR Data Centre through the Directorate General of Oil and Gas (“DGOG”):

Consistent with MEMR 27/2006, MEMR 7/2019 continues to broadly classify oil and gas data produced from oil and gas exploration or exploitation activities into four categories. However, MEMR 7/2019 now regulates the timeframe for delivery of the data to the MEMR Data Centre through the DGOG:

Notwithstanding the time frames for data delivery set out above, the transitional provisions of MEMR 7/2019 require exploitation PSC contractors whose working areas will expire prior to 1 August 2021 to immediately deliver all undisclosed oil and gas data to the DGOG.

Data utilisation permits

In addition to the new data utilisation system, for several years the Indonesian Government has allowed PSC contractors to apply for a data utilisation permit in order to disclose confidential oil and gas data for specific purposes, including disclosure for M&A transactions, disclosure between PSC contractors with adjacent blocks, and disclosure for domestic or overseas data processing or evaluation. MEMR 7/2019 expands the circumstances in which a data utilisation permit can be granted, including for disclosure between PSC contractors or to any party overseas, and for disclosure to a party interested in managing an expiring or relinquished working area.

MEMR 7/2019 does not amend the requirements or process for PSC contractors to obtain a data utilisation permit in order to disclose data in the context of an M&A transaction. However, MEMR 7/2019 now expressly requires all PSC contractors transferring their participating interest to a third party to also deliver all oil and gas data to the relevant transferee. Such data delivery must be recorded in minutes of data delivery signed by both parties.