Beware of Sanctions! Minister of Energy and Mineral Resources Regulation No. 7 of 2026 Completely Overhauls Business Licensing Standards in the Energy Sector

Introduction

On 8 June 2026, the Ministry of Energy and Mineral Resources (“MEMR”) issued Minister of Energy and Mineral Resources Regulation Number 7 of 2026 on Business Activity Standards in the Administration of Risk-Based Business Licensing in the Energy and Mineral Resources Sector (“MEMR Regulation 7/2026”), which came into force on 12 June 2026. This regulation establishes the latest classifications and operational standards for all business entities obtaining Business Licenses (“BL”) and Supporting Business Licenses (“SBL”) in the oil and gas, electricity, mineral and coal, renewable energy, and geology subsectors.

MEMR Regulation 7/2026 was enacted in response to the transition of Indonesia’s principal national licensing framework, implementing the mandate of Article 5 paragraph (7) of Government Regulation Number 28 of 2025 on the Administration of Risk-Based Business Licensing (“GR 28/2025”). The Government aims to eliminate bureaucratic obstacles, particularly in fulfilling basic requirements such as spatial conformity, and to provide operational legal certainty for emerging activities such as Carbon Capture and Storage (“CCS”), thereby achieving the objective of a secure and standardized investment climate.

Key Provisions

Mandatory Use of the OSS System and Basic Requirements

Article 2 requires every business actor in the energy and mineral resources sector to obtain BL and SBL, which must be processed entirely through electronic means via the OSS System.

Article 3 stipulates that business actors must satisfy the applicable basic requirements before a license may be issued, subject to certain strategic exceptions. The Government exempts the requirement for the assessment of Spatial Utilization Activity Conformity for the survey and exploration stages of renewable energy projects, mineral and coal exploration activities, and certain electricity infrastructure projects whose locations have been registered in the OSS System.

Graduated Administrative Sanctions

Articles 7 through 11 set out the mechanism for imposing sanctions on business actors that violate licensing requirements in each subsector. The Government may impose administrative sanctions progressively, ranging from written warnings, fines, and temporary suspension of operations to the revocation of business licenses.

Specifically for the electricity subsector, Article 8 paragraph (2) provides that the Government may suspend or revoke a business license if the violation results in safety casualties, health-related issues, or environmental damage.

Other Provisions

Article 4 determines the division of industrial subsectors, whereby principal Business Licenses are categorized into four subsectors (oil and gas, minerals and coal, electricity, and new and renewable energy), while Supporting Business Licenses (SBL) are categorized into five subsectors (oil and gas, electricity, minerals and coal, new and renewable energy, and geology).

Article 5 affirms that all principal business activity standards are set out in Appendix I, while standards for supporting business licenses are set out in Appendix II, both of which constitute legally binding and inseparable parts of the regulation.

Article 6 mandates strict supervision over the implementation of Business Licenses and Supporting Business Licenses to ensure compliance with the applicable legal framework in Indonesia.

Pursuant to Article 13, Supporting Business Licenses for the commercial transportation of crude oil, natural gas, fuel oil, gas fuel, and/or refined products using transportation modes other than pipelines shall be carried out in accordance with the norms, standards, procedures, and criteria of the transportation sector under GR 28/2025.

Transitional Provisions

Pursuant to Article 15, where applications for Business Licenses or Supporting Business Licenses are still being processed and the OSS System has not yet completed its migration to the GR 28/2025 framework, the Government shall continue processing and issuing such licenses under the previous regulatory framework.

Furthermore, Article 16 regulates the legal status of licenses issued prior to 12 June 2026, confirming that such licenses shall remain valid and effective until their respective expiration dates.

Under Article 17, business entities holding Oil and Gas Processing, Storage, or Trading Licenses that conduct blending activities between petroleum and biofuel products are permitted to continue operating. However, such business entities are required to align all operational standards with the provisions of MEMR Regulation 7/2026 no later than 12 June 2027.

Closing

MEMR Regulation 7/2026 requires business actors in the energy sector to promptly align their operational compliance standards with the new risk-based regulatory framework. Business actors must ensure that all licenses are properly recorded within the OSS System and rigorously implement risk management measures, particularly with respect to high-risk facilities such as carbon storage and electricity infrastructure.

Companies that fail to comply with these safety and environmental standards may be subject to operational suspension and even permanent revocation of their licenses, particularly where such negligence results in casualties or environmental damage.