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IMPACT – HIGH
What is the change? Authorities will no longer require letters of recommendation from the Ministry of Energy and Mineral Resources for companies applying for work permits in the oil and gas sector.
What does the change mean? Oil and gas companies may now complete the work permit process by submitting applications directly to Indonesia’s Ministry of Manpower. The change is expected to save significant time in the application process.
Background: The change was made following the issuance of a decree in February by the minister of Energy and Mineral Resources. While ministry letters of recommendation will no longer be required, those applying to work in Indonesia’s oil and gas sector for more than six months must still have (1) at least five years of relevant work experience, (2) a bachelor’s degree, (3) an Indonesian labor companion and (4) a contract or project agreement with an oil or gas company. The waiver applies not only to companies in the oil and gas sector, but also to subcontractors that contract with oil or gas companies even if the subcontractor’s work does not specifically relate to oil and gas activity.
The waiver only relates to recommendations issued by the Directorate General of the Ministry of Energy and Mineral Resources. Other industry-regulating institutions in Indonesia such as the SKK Migas (Special Taskforce for Upstream Oil and Gas Business Activities) may still need to issue separate letters of recommendation, as applicable to the sponsoring company.
BAL Analysis: The change is welcome news for companies working in Indonesia’s oil and gas sector. While employers should be prepared for the possibility of additional regulations that could create new administrative requirements, the waiver will, for now, save significant time in the work permit application process.
This alert has been provided by the BAL Global Practice group and our network provider located in Indonesia. For additional information, please contact your BAL attorney.
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