New Indonesian Government Policy on “Participating Interest” Arrangements in Oil and Gas Management

Abstract

State control over natural resources is stated in the 1945 Constitution of the Republic of Indonesia with the aim of maximizing the welfare and prosperity of the Indonesian people. Natural resources have two characteristics, namely renewable resources (renewable natural resources) and natural resources that are non-renewable (non-renewable natural resources). One type of nonrenewable natural resource in the mining sector, namely oil and natural gas. Oil and gas mining operations carry several relatively high risks. This activity has a relatively higher physical and social impact compared to commodity companies in general (Sutedi, 2010, p.43). The government’s authority in regulating mining, regarding the utilization and management of oil and gas in a comprehensive manner is regulated in Law Number 22 Year 2001 regarding Oil and Gas Mining (Oil and Gas Law). Upstream Oil and Gas Business Activities are exploration and exploitation of oil and gas which can be carried out by companies that have obtained the approval of the Minister of Energy and Mineral Resources, which in this case is represented by the Special Task Force for Upstream Oil and Gas Business Activities (SKK Migas). SKK Migas represents the minister in approving the management of Oil and Gas.