Jakarta. The Indonesian government will soon issue a regulation that legalizes the operation of marginal conventional oil wells by non-corporate entities. Energy and Mineral Resources Minister Bahlil Lahadalia said on Saturday that these so-called stripper wells collectively have the potential to produce up to 20,000 barrels per day nationwide.

The new ministerial regulation is set to take effect on July 3, providing a legal framework for small-scale, individually operated oil wells that have long operated in a legal gray area.

However, Bahlil stressed that the regulation applies strictly to existing wells -- not to new drilling operations by individuals.

“Let me be clear: this permit applies only to existing wells. We are legalizing marginal conventional wells that have already been producing oil,” Bahlil said in Jakarta.

The regulation comes in response to the widespread presence of “sumur minyak rakyat” -- traditional, community-operated oil wells -- which have often been mired in legal disputes due to the absence of clear regulations. These small-scale operators frequently sell oil to buyers other than state-owned energy firm Pertamina, resulting in state revenue losses.

Article 33, Paragraph (3) of the 1945 Constitution, declares that, “The land, the waters, and the natural resources contained therein shall be controlled by the state and utilized for the greatest benefit of the people.”

“Historically, these individually operated wells have been considered illegal. Now, the government is moving to legalize them, ensure their operations comply with environmental standards, and guarantee that their output is sold at fair prices,” Bahlil said.

“It’s unfortunate that these operators, who are our fellow citizens, have long faced legal problems. The government wants to help them adopt sustainable mining practices, secure decent livelihoods, and at the same time, contribute to boosting national oil production,” he added.

Bahlil cited Musi Banyuasin Regency in South Sumatra as an example, where there are 7,721 community-operated oil wells involving over 231,000 workers. Without formal regulation and government oversight, these wells have been prone to fatal accidents and serious environmental damage, he noted.
 

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