Negotiation Points between the Indonesian Government and the US Government on Oil and Gas

The government plans to conduct a number of negotiations following the implementation of reciprocal tariffs by the United States (“US”) Government. Caretaker Director-General of Oil-and-Gas (“Director-General”) at the Ministry of Energy and Mineral Resources (Energi dan Sumber Daya Mineral - “ESDM”) Tri Winarno revealed that a number of negotiation points have been prepared to be brought to the US government, particularly in the oil-and-gas sector (“Oil & Gas”).

“They (the US Government) say that our government is inconsistent. But in fact, we are consistent. We will explain several things, several points,” said Tri.

According to Tri, the government plans to explain the provisions stipulated in Regulation of the Government No. 93 of 2021 on Income Tax Treatment (Perlakuan Pajak Penghasilan - “PPh”) for the Transfer of Participation Interests in Upstream Oil-and-Gas Activities (“Regulation 93/2021”) which is considered one of the obstacles to Oil & Gas investment in Indonesia.

The United States Trade Representative (“USTR”) document explains the reasons for imposing tariffs on the oil-and-gas sector due to the existence of Regulation 93/2021, which gives the government significant authority to change the provisions of production sharing contracts, which is considered to create uncertainty.