Indonesia Oil & Gas Regulation – Import/Export Of Natural Gas – Energy and Natural Resources

Under Indonesian law, cross-border sales of natural gas can only
be conducted if (i) the domestic need for natural gas has been
fulfilled, (ii) there is insufficient domestic infrastructure, or
(iii) domestic purchasing power is insufficient to satisfy the
relevant gas field’s economics.

Pursuant to Ministry of Energy and Mineral Resources (MEMR)
Regulation No. 6 of 2016 regarding Provisions and Procedures for
Stipulating the Allocation and Utilization as well as Pricing of
Natural Gas, as partially revoked by MEMR Regulation No. 32 of 2017
(MEMR Reg. 6/2016), the allocation of natural gas production is
prioritised: (i) for the Government’s program to provide
natural gas for transportation, households, and small-scale
customers; (ii) to increase national oil and gas production; (iii)
for the fertiliser industry; (iv) for industries that use natural
gas as a raw material; (v) for the provision of power; and (vi) for
industries that use natural gas as fuel.

Cross-border deliveries of natural gas are subject to import or
export approvals from the Ministry of Trade, which takes into
account the import or export recommendation from the Directorate
General of Oil and Gas (DGOG). The DGOG considers domestic supply
and demand in issuing such recommendation.

In regard to imports in general, an additional licence is
required in the form of a Business Registration Number (NIB), in
accordance with Government Regulation No. 24 of 2018 regarding
Electronic Integrated Business Licensing Services (GR 24).

The NIB acts as an import licence issued by the Online Single
Submission (OSS) system implemented under the auspices of the
Indonesian Capital Investment Coordinating Board (BKPM). Although
the import of natural gas is not specifically subject to an NIB
pursuant to GR 24, in practice entities importing natural gas are
required to obtain an NIB.

The Job Creation Law designates a new licensing regime, e.g.
risk-based licensing, which stipulates different business licensing
requirements for business activities classified as low, medium or
high risk. The Job Creation Law has not stipulated the level of
risk for natural gas import activities and therefore has not
specified the applicable Business Licence(s). This may be further
clarified in a government regulation expected to be issued to
implement the Job Creation Law.

This is an excerpt from The International Comparative Legal
Guide to: Oil & Gas Regulation 2021. You can find the full chapter here.

The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.