MEMR Regulation No. 15 of 2018 on Post-Operation Activities in the Upstream Oil and Gas Sector
The MEMR Regulation No. 15 of 2018 on Post-Operation Activities in the Upstream Oil and Gas Sector (“Post-Operation Activities Regulation”) imposes certain requirements on upstream oil and gas operators with respect to abandonment and site restoration. This Regulation specifies that upstream oil and gas operators must conduct post-operation activities and must allocate funds for this purpose (Article 2). Operators are required to develop a post-operation activity plan, which must list the equipment that needs to be dismantled (including wells that need to be plugged) and estimated costs (Article 3). The plan must be submitted to the Special Task Force for Upstream Oil and Gas Activities ("SKK Migas") for approval (Article 3). Once the plan has been approved by SKK Migas, the operator must submit a post-operation proposal to the Ministry of Energy and Mineral Resources (“MEMR”) (Article 6). After the proposal has been approved by the MEMR, the operator must immediately conduct post-operation activities, including permanent closure of wells (Article 7).
In addition, the Regulation specifies that oil and gas operators who have signed a production sharing contract with SKK Migas are required to set aside funds for post-operation activities (Article 11). The funds are calculated based on the estimated cost for post-operation activities as described in the operator’s post-activity plan. The funds must be deposited in a joint bank account controlled by SKK Migas and the operator at an Indonesian state-owned bank (Article 11). Funds must be deposited gradually throughout the exploitation of the asset, starting during the year where commercial production commences.
These provisions are in line with the obligation of oil and gas operators under the Oil and Gas Law of 2001 to conduct post-mining operations to prevent pollution and restore environmental damage (Article 40).
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