Indonesia issues further regulations for CCS and CCUS
deployment – A quick guide to Presidential regulation
14/2024 and SKK Migas regulation PTK-070
February 2024
Background
Following the issuance last year of an initial regulation on Carbon Capture and Storage (CCS) and Carbon
Capture Utilization and Storage (CCUS) for Upstream Oil-and-Gas Business Activities (MEMR 2/2023 –see our previous article here), the Indonesian government recently issued a much broader overarchingframework on the Organization of CCS Activities (PR 14/2024) which came into force on 30 January 2024.
Recognizing the role of CCS technology in mitigating carbon emissions from certain "hard to abate"sectors (such as oil & gas, steel, cement and other heavy industries) and Indonesia's vast geologicalpotential, the regulation provides a framework for CCS activities and projects to be implemented acrossthe Indonesian archipelago. PR 14/2024 lays out licensing requirements and the process to award rights
over CCS work areas from exploration to end-of-life. It also opens the door to cross-border transportationand the storage of CO2 generated outside Indonesia (albeit limited to a maximum of 30% of the relevant
storage work area capacity).
Besides PR 14/2024 which is meant to act as the umbrella regulation for CCS in Indonesia, a further
technical regulation1 on the Implementation of CCS and CCUS in Oil & Gas Work Areas (PTK-070) has
also recently been issued by the Special Working Unit for the Organization of Upstream Oil-and-Gas
Business Activities (SKK Migas). PTK-070 is an implementing regulation of MEMR 2/2023 providing
additional details on procedures and requirements for upstream oil and gas contractors engaging in
CCS/CCUS within their designated Work Areas.

1

PTK-070/SKKIA0000/2024/S9.

Ashurst OSP

1Indonesia issues further regulations for CCS and CCUS
deployment – A quick guide to Presidential regulation
14/2024 and SKK Migas regulation PTK-070

1.

Overview of PR 14/2024

Summary:
PR 14/2024 is a substantial and detailed regulation spanning 77 articles.
The main areas of coverage of PR 14/2024 are as follows:

Implementation of CCS activities based on cooperation contracts;

Carbon Storage Permit Areas and the tendering process for awarding such areas;CO2 exploration, storage and transport stages;Closure of CCS activities;CO2 storage capacity for domestic needs;

Ownership of CCS assets;



Cross-border transportation of CO2;Business schemes for CCS activities;

Incentives available for CCS projects;



MRV;



Environmental and safety requirements; andSanctions.

Key concepts:
PR 14/2024 introduces certain concepts which are used throughout the regulation and define its
scope of coverage:

2
3



Carbon 2 (CO2) is defined as carbon dioxide (CAS 124-38-9) with certain concentration
specifications originating from emissions captured and processed using various technologies
by observing good engineering standards and principles, originating from upstream oil andgas business activities, power generation, industry, and other emission producing activities
produced domestically or abroad with the aim of being injected into an injection target zone.

Injection Target Zone3 (zona target injeksi or ZTI), is defined as a rock system in a geologicalformation consisting of storage zone layers, buffer zone layers, impermeable zone layers andgeological traps that are able to accommodate injected CO2, safely and permanently while
meeting environmental safety standards.

Article 1(2) of PR 14/2024.
Article 1(4) of PR 14/2024.

Ashurst OSP

2Indonesia issues further regulations for CCS and CCUS
deployment – A quick guide to Presidential regulation
14/2024 and SKK Migas regulation PTK-070

1.1

Implementation of CCS based on Cooperation Contracts

The procedure for implementation of CCS activities in Oil & Gas Work Areas by contractors basedon cooperation contracts (PSCs) with SKK Migas or the Aceh Migas Organizational Body (Badan
Pengelola Migas Aceh or BPMA) 4 is described in Articles 4-8 of PR 14/2024. These provisions arealigned with the framework previously set out in MEMR 2/2023, which preceded the issuance of PR
14/2024 and was focusing on the implementation of CCS/CCUS by contractors in the upstream oil & gas
sector. Please refer to our previous article for an overview of the implementation of CCS based on PSCs.
1.2

Carbon Storage Permit Areas

Separately from the regime for contractors based on PSCs, CCS activities may also be conducted byother parties in "Carbon Storage Permit Areas" which consist of: 5Business entities incorporated in Indonesia or Permanent Establishments6 can propose Carbon
Storage Permit Areas to MEMR7 who in turn prepares and determines the Carbon Storage Permit Areasby conducting (i) an initial risk evaluation and (ii) a review of relevant technical data on the Carbon Storage
Permit Area.
If a proposed area is overlapping or within an area under a mining business license or oil & gas workarea, MEMR shall conduct the initial risk and technical evaluation by obtaining data through datautilization cooperation or joint utilization of surface facilities.8

4 Depending on the location of the Work Area.

5

Article 9, PR 14/2024.
of PR 14/2024 defines Permanent Establishments as business entities that are established andincorporated outside of the territory of Indonesia which carry out activities within the territory of Indonesia and are
obliged to comply with the laws and regulations that are prevailing in Indonesia.
7
Article 10, PR 14/2024.
8 Article 10, PR 14/2024.
6 Article 1(21)Ashurst OSP

3Indonesia issues further regulations for CCS and CCUS
deployment – A quick guide to Presidential regulation
14/2024 and SKK Migas regulation PTK-070

In the event that there is potential for CCS in an Oil & Gas Work Area that is not exploited by thecontractor, then9 any of its affiliates or a third-party business entity or Permanent Establishment, canpropose such area to MEMR to be designated as a Carbon Storage Permit Area.
If such area is subsequently accepted and "determined" as a CCS area by MEMR10, it may then beoffered to business entities or Permanent Establishments through a limited selection process.
On the other hand, PR 14/2024 implies that for Carbon Storage Permit Areas offered directly by MEMR
an auction process will be implemented.
In order to participate in a limited selection or auction, business entities/Permanent Establishments11
must fulfil the following cumulative conditions:

1.3

Permitting

The implementation of CCS in Carbon Storage Permit Areas requires the following 2 permits issued by
MEMR: 12

Exploration PermitStorage Operation Permit

1.3.1

Exploration Permit

The winner of the limited selection or auction for the Carbon Storage Permit Area is granted an
Exploration Permit by MEMR after submitting an application. 13 through the national electronic businesslicensing system (referred to as OSS or online single submission).

9

Article 13, PR 14/2024.

10 Article 14, PR 14/2024.

11 If the participant is in the form of a consortium, they must have a consortium agreement which includes the

allocation of which business entity/Permanent Establishments are the operator (i.e. the entity that will represent theconsortium in communication and coordinating on behalf of the consortium).
12 Article 3 & Article 9, PR 14/2024.
13 In the event that the winner of a limited selection or auction is a consortium, one of the consortium members canbe appointed to be the operator representing the other consortium members or members can form a business entity
or permanent establishment to hold the Exploration Permit.

Ashurst OSP

4Indonesia issues further regulations for CCS and CCUS
deployment – A quick guide to Presidential regulation
14/2024 and SKK Migas regulation PTK-070

Exploration Permits must at least contain provisions regarding the following aspects:

Exploration Permits are valid for 6 years and can be extended once for a maximum of 4 years.
Exploration Permits cannot be transferred.14
Exploration Permit holders are required to submit a work plan covering the implementation of ZTI
Exploration commitments and obtain approval from MEMR15.
If the ZTI's exploration activities establish the potential for commercial Carbon Storage capacity, theExploration Permit holder may then submit a plan for development and operation of the ZTI area to
MEMR.16
1.3.2

Storage Operation Permit

The implementation of CCS in the Carbon Storage Permit Area may only be carried out after the Business
Entity obtains a Storage Operation Permit.17
Storage Operation Permits can only be granted to business entities. If an Exploration Permit holder isa Permanent Establishment, the Permanent Establishment must form a business entity incorporated in

14 Article 17, PR 14/2024.

15

Article 18, PR 14/2023.

16 Article 20, PR 14/2024.
17 Article 28, PR 14/2024.

Ashurst OSP

5Indonesia issues further regulations for CCS and CCUS
deployment – A quick guide to Presidential regulation
14/2024 and SKK Migas regulation PTK-070

Indonesia to obtain the Storage Operation Permit, and the shares of such business entity must be entirely
owned by the Permanent Establishment.18
Exploration Permit Holders who have obtained approval for the ZTI Plan for Development and Operation
are entitled to a Storage Operation Permit. Application is submitted to MEMR through the OSS and thepermit subject to the fulfillment of certain administrative, technical, environmental and financial
requirements.19
Storage Operation Permits are granted for a maximum of 30 years and can be extended for a maximumof 20 years taking into account the storage capacity in the Carbon Storage Permit Area.20
Holders of Storage Operation Permits are required to submit an annual work plan for the implementationof CO2 storage operation activities for approval by MEMR, prior to carrying out their operations.21
1.3.3

Carbon Transportation Permit

CO2 transportation business activities can be carried out pursuant to a Carbon Transportation
Permit.22
CO2 transportation business activities can be carried out by:after obtaining a Carbon Transportation Permit from MEMR and/or the Minister of Transportation(MOT):
1. Transportation by pipe (not underwater): Carbon Transportation Permit granted by MEMR after
the activity obtains its environmental approval;
2. Transportation by underwater pipes: Carbon Transportation Permit granted by MEMR after
coordination with the Ministry of Maritime Affairs and Fisheries; and3. Transportation by trucks, ships and/or other methods: Carbon Transportation Permit grantedby MOT upon recommendation from the Ministry of Environment and Forestry (MOEF).
Carbon Transportation Permits are granted for up to 20 years (except for transportation by trucks, ships,
and/or other methods which are granted for up to 10 years) and can be extended for a maximum of 10
years for each extension. 23

18 Article 23, PR 14/2024.
19 Article 24, PR 14/2024.
20 Article 25, PR 14/2024.
21 Article 26, PR 14/2024.
22 Article 30, PR 14/2024.
23 Article 31, PR 14/2024.

Ashurst OSP

6Indonesia issues further regulations for CCS and CCUS
deployment – A quick guide to Presidential regulation
14/2024 and SKK Migas regulation PTK-070

1.4

Carbon Storage Capacity for Domestic Needs

An important feature of PR 14/2024 relates to the prioritization of CO2 storage capacity for domestic
CO2 producers. Contractors and Storage Operation Permit holders who implement CCS activities are
required to reserve 70% of their CO2 storage capacity for CO2 from domestic sources.24 Conversely,
contractors and Storage Operation Permit holders can allocate 30% of their CO2 storage capacity for the
storage of CO2 originating from outside Indonesia. Importantly, storage of CO2 originating from abroad
can only be carried out by CO2 producers who invest and/or are affiliated with investments inIndonesia. The regulation does not elaborate on the interpretation to be given to the reference to"investment or affiliation with investments in Indonesia" which can therefore (until further clarity isprovided by way of implementing regulation or guidelines) be construed widely and could be tested indue course upon application to MEMR.
1.5

Closure of CCS activities

Closure of CCS is to be carried out in the following circumstances:25

24 Article 35, PR 14/2024.
25 Article 36, PR 14/2024.

Ashurst OSP

7

Indonesia issues further regulations for CCS and CCUS
deployment – A quick guide to Presidential regulation
14/2024 and SKK Migas regulation PTK-070

Prior to closure, the contractor, through SKK Migas or the Storage Operation Permit holder, must submit
a CCS Activities Closure Plan to MEMR. The Closure Plan must include at least the following
information26:
a. information on the subsurface up until the ZTI, equipment, installations, facilities and wells where
the CCS activities have been closed;b. total CO2 storage;c.

cost estimation;d. timing of the closure;e. post-closure monitoring plan; andf.

prevention plan to mitigate any: (i) environmental damage; (ii) danger to humans; (iii) damage tonatural resources; and (iv) damage to equipment, installations and facilities, all as a result of theclosure of CCS activities.

If MEMR approves the Closure Plan for CCS activities, the contractor or Storage Operation Permit holder
shall carry out the closure of CCS activities in accordance with the approved closure plan. If on the other
hand MEMR rejects the plan, the contractor or Storage Operation Permit holder shall have to make
improvements to the plan in order to be able to close CCS activities.
Under MEMR 2/2023, the contractor may also return part of its Work Area to MEMR through SKK Migas
or BPMA before the end of the PSC period where a depleted reservoir has carried out CCS or CCUS
activities.
Of critical importance for potential developer-operators and investors, upon closure of the CCS activities
or transfer of all or part of the Work Area to MEMR, the supervision and responsibility for the depleted
reservoir where CCS activities have been carried out will then be transferred to the State through
MEMR and the Directorate General of Oil & Gas.
1.6

Ownership of CCS Assets

All goods and equipment purchased by contractors and used directly in the implementation of their CCS
activities shall become state assets (barang milik negara), whilst on the other hand, holders of Storage
Operation Permits shall retain ownership over goods and equipment related to CCS activities theyacquire.27
1.7

Cross- Border Transportation of CO2

In order to facilitate cross-border CCS transportation, bilateral cooperation agreements between
countries may be concluded. Such cooperation agreements are to serve as a guideline for all parties toissue recommendations or permits required for cross-border CO2 transport in accordance with therelevant laws and regulations in the respective countries.28

26

Article 36(4), PR 14/2024.
Article 44, PR 14/2024.
28 Article 45, PR 14/2024.
27

Ashurst OSP

8Indonesia issues further regulations for CCS and CCUS
deployment – A quick guide to Presidential regulation
14/2024 and SKK Migas regulation PTK-070

Every CO2 transport activity into the Indonesian territory (referred to as the Indonesian customs area)
must be carried out with means that meet safety, occupational health and environmental protection
requirements.29 CO2 transported into Indonesia must be registered by the importer at the time of the firstimport in accordance with applicable customs and import regulations 30 with subsequent imports only
requiring notifications.
Transportation of CO2 from abroad for storage into the Indonesian territory can only be carried out after
the entering into of a bilateral agreement between the Republic of Indonesia and the country where theCO2 is produced and captured. 31 We anticipate that such bilateral agreements would address theinternational law obligations of the Republic of Indonesia and the other country that may haverelevance to the relevant transboundary movement of CO2, including:the "London Protocol" (where the country producing and capturing the CO2 is a party to theProtocol, noting that, in those circumstances, the country exporting the CO2 is accountable forcompliance with the Protocol, including establishment of a bilateral agreement or arrangement with
the Republic of Indonesia that, at a minimum, provides the same environmental protections as would
occur if Indonesia were a contracting party);

the UN Convention on the Law of the Sea (especially Article 210 concerning regulation of pollutionof the marine environment through dumping at sea); and

the 1989 Convention on the Control of Transboundary Movements of Hazardous Wastes and Their
Disposal or "Basel Convention" (to the extent that the CO2 waste streams in question qualify as a"hazardous waste" under that Convention).

Importantly, in the event of a leak during transportation within the territory of Indonesia (includingIndonesian waters), such leak must not add to Indonesia's greenhouse gas inventory.32 This is likely tobe an important consideration in negotiating agreements between the CO2 producing party and the CO2storing party on how leakage is to be addressed, especially having regard to the fact that the existing
2006 IPCC Guidelines contemplate that Indonesia (as the storage state) should "report the amount of
CO2 imported, any emissions from transport and/or temporary storage (that takes place in Country B),
and any emissions from injection and geological storage sites".33
The rights and obligations of parties involved in cross-border CO2 transportation and handover, including
the allocation of responsibilities in the event of a leak, are to be regulated under applicable laws andregulations as well as in accordance with the agreements in place between the various parties involved:
emitters, Carbon Transportation Permit holders, Storage Operation Permit holders, and/or contractors.34

29 Article 47, PR 14/2024.

30

Such as Law No. 10 of 1995 on Customs, as amended by Law No. 17 of 2006, Government Regulation No. 29 of
2021 on the Organization of the Trade Sector and Ministry of Trade (MOTR) Regulation No. 20 of 2021 on Import
Policy and Provisions, as amended by MOTR Regulation No. 25 of 2022.
31 Article 47, PR 14/2024.
32 Article 47, PR 14/2024.
33
2006 IPCC Guidelines for National Greenhouse Gas Inventories, Vol 2, Chapter 5, section 5.10.
34 Article 47, PR 14/2024.

Ashurst OSP

9Indonesia issues further regulations for CCS and CCUS
deployment – A quick guide to Presidential regulation
14/2024 and SKK Migas regulation PTK-070

1.8

Business schemes

The implementation of CCS activities can be monetized through the imposition of storage fees35. For Oil& Gas contractors, there are also other monetization opportunities which we will discuss in Point 2.4
below. Storage fees obtained by Storage Operation Permit holders are subject to non-tax staterevenues (royalties) which must be paid to the Government. Details on the amount of the storage fees
will be set out in a Ministerial Regulation 36. PR 14/2024 also provides that the tax treatment for themonetization of CCS activities by contractors shall comply with the existing laws and regulations
applicable to upstream oil & gas activities.37
1.9

Carbon Economic Value

PR 14/2024 contains a brief reference to the concept of Carbon Economic Value and that each party
undertaking CCS activities is required to record and report the implementation of Carbon Pricing throughCCS activities in the National Registry System for Climate Change Control (Sistem Registrasi
Nasional Pengendalian Perubahan Iklim or SRN PPI)38.
Carbon Pricing is regulated in Indonesia through Presidential Regulation No. 98 of 2021 on the
Implementation of Carbon Pricing for the Purpose of Achieving Indonesia's Nationally Determined
Contribution and the Control of Greenhouse Gas Emissions in National Development (PR 98/2021) and
Ministry of Environment and Forestry Regulation No 21 of 2022 on the Guidelines for the Implementationof Carbon Pricing (MOEF 21/2022). Please refer to our previous client alert on this topic: "Regulatory
Overview of Carbon Pricing and Trading in Indonesia".

35

Article 42, PR 14/2024.
Article 42(6), PR 14/2024.
37
For Normal PSCs, the tax regime shall follow Government Regulation No. 79 of 2010, as amended, whereas for
Gross Split PSCs, the tax regime shall follow Government Regulation No. 53 of 2017, as amended.
38
Article 54, PR 14/2024.
36

Ashurst OSP

10Indonesia issues further regulations for CCS and CCUS
deployment – A quick guide to Presidential regulation
14/2024 and SKK Migas regulation PTK-070

1.10

Incentives

Contractors, Exploration Permit holders, Storage Operation Permit holders and/or Carbon Transportation
Permit holders may be granted tax and non-tax incentives in order to support the implementation of
CCS39. These incentives shall be granted in accordance with the prevailing regulations, for example theimport duty tax holiday provided under Minister of Finance (MOF) Regulation No. 176/PMK.011/2009, as
amended by MOF Regulation No. 188/PMK.010/2015.
It would be beneficial for the GOI and MOF to further clarify the exact tax and non-tax incentives available
for CCS as the reference to prevailing regulations seems to indicate that no specific incentives areavailable to kick-start the industry whereas:other countries in the region which are also looking to develop CCS hubs are offering substantial
incentives to attract investments, such as Malaysia, which offers (among others) a tax allowance of
100% of qualifying capital expenditure which can be set-off against up to 100% of business statutory
income for a period of 10 years; and

incentives are critical at this early stage of the development of the industry where the commerciality
and profitability of CCS deployment is challenging especially if there are not any or insufficientdisincentives to CO2 emissions (such as the implementation of a meaningful carbon tax).

1.11

Divestment / Sell-down

PR 14/2024 restricts the transfer of the main licenses for CCS activities 40 . The regulation also
provides that the majority of shares in a Business Entity holding:an Exploration Permit can only be transferred after the business entity/permanent establishment
has implemented all the commitments for ZTI Exploration and subject to MEMR approval; and

a Storage Operation Permit can only be transferred after obtaining approval from MEMR, whowill consider the sustainability of permanent and safe Carbon Storage operations in accordancewith the provisions set out in the Storage Operation Permit.

1.12

Sanctions

PR 14/2024 imposes administrative sanctions for failures to comply with its requirements, including
violations against the prohibition to transfer the Exploration Permit or Storage Operation Permit, and/or
failure to comply with reporting obligations.41 These sanctions can be in the form of:

Written reprimand;

Temporary or complete suspension of ZTI exploration, carbon storage operations or carbon
transportation activities; and/or

Revocation of permits.

39

Article 43, PR 14/2024.
Further details on the transfer of shares in business entities/permanent establishments holding CCS permits will
be set out in a Ministerial regulation.
41
Article 74 & 75, PR 14/2024.
40

Ashurst OSP

11

Indonesia issues further regulations for CCS and CCUS
deployment – A quick guide to Presidential regulation
14/2024 and SKK Migas regulation PTK-070

2.

Snapshot of PTK-070

PTK-07042 regulates the implementation of CCS & CCUS activities by oil & gas contractors providing
guidelines for the contractors to apply throughout each stage of carrying out their activities. It is a technicalregulation issued by SKK Migas which applies to upstream oil & gas contractors (Contractors) who
undertake CCS/CCUS activities in their Work Area. In this section, we provide an overview of the main
provisions and requirements of PTK-070.
2.1

Prerogatives and Obligations of Key Stakeholders

SKK Migas is responsible for carrying out control, supervision, as well as evaluation and approval ofwork plans and budget for the implementation of CCS/CCUS activities in the Work Area by theContractors43.
The chart below provides an overview of SKK Migas' main prerogatives in relation to CCS/CCUS activities:

42

PTK-070 was issued by SKK Migas hence, it only applies to those Work Areas within the jurisdiction of SKK
Migas (and not those within the jurisdiction of BPMA in offshore Aceh). It is unclear if the BPMA will issue its own
regulation on the implementation of CCS.
43
Chapter II Article 2.1, PTK-070.

Ashurst OSP

12Indonesia issues further regulations for CCS and CCUS
deployment – A quick guide to Presidential regulation
14/2024 and SKK Migas regulation PTK-070

Contractors are responsible for the actual implementation of CCS/CCUS activities within their respective
Work Areas which includes planning, evaluation, implementation, monitoring, Measurement, Reportingand Verification (MRV) and closure44.

2.2

Implementation of CCS/CCUS in Work Areas

Prior to the implementation of the CCS/CCUS activities, Contractors must first identify the CCS/CCUS
system and boundaries by clearly identifying the sources of CO2. Contractors may carry out CCS/CCUS
originating from the capture of CO2 originating from other industries (than upstream oil & gas) with theapproval of SKK Migas45.

44
45

Chapter II Article 3.1, PTK-070.
Chapter III Article 1.6, PTK-070.

Ashurst OSP

13

Indonesia issues further regulations for CCS and CCUS
deployment – A quick guide to Presidential regulation
14/2024 and SKK Migas regulation PTK-070

In the event that the CO2 is sourced from other industries, the contractor must conduct a feasibility
study jointly with the CO2 emitter/supplier to ensure the feasibility and availability of CO2.46
Contractors may use new wells or converted old wells for the implementation of CCS/CCUS47 and theCO2 may be stored in saline aquifers or depleted reservoirs (these saline aquifers and depleted reservoirs
are natural resources owned by the State). Contractors must collect data on the potential CO2 ZTIs,
which includes conducting geological, geo-mechanical, geo-physical, reservoir and productionengineering studies and pilot projects (if required) to initial test and develop CCS/CCUS technology on asmall scale.48
2.3

Monitoring and MRVMonitoring and MRV are to be carried out at every stage of the process (from capture to closure) toensure that CCS/CCUS activities are carried out safely, effectively and efficiently.49 Monitoring and MRVshould also aim at ensuring that GHG emissions are reduced and CO2 is permanently stored inaccordance with the storage plans approved by SKK Migas. Contractors are obliged to carry out MRV of
mitigation actions (i.e. through permanent CO2 capture and storage) for CO2 emission reduction claims
in order to support Indonesia's National Determined Contributions (NDCs) and Net Zero Emission (NZE)
target achievements.
Contractors are to report their GHG emissions reduction activities to SRN PPI, which is a web-based dataand information management system on actions and resources for climate change mitigation, climatechange adaptation, and carbon economic value managed by MOEF. The report must include the amountof CO2 captured, transported and stored.
Contractors are required to set aside the costs of monitoring activities to cover a period of 10 years after
completion of the closure of CCS/CCUS activities.50 Such funds for monitoring activities is to be depositedin an escrow account, following the mechanism used by contractors for Abandonment and Site
Restoration (ASR) fund reservation in accordance with SKK Migas Working Guidelines No. PTK040/SKKMA0000/2018/S0 concerning ASR.51
2.4

Monetization of CCS/CCUS

Contractors may monetize CCS/CCS operations relating to CO2 emissions from upstream oil & gas,using 2 schemes:52

46 Chapter III Article 1.3, PTK-070

47

Chapter III Article 1.4 of PTK-070.

48 Chapter III Article 2.1, PTK-070

49

Chapter IV Article 1.1 of PTK-070

50 Chapter IV Article 2.3, PTK-070 and Chapter VII Article 2.5.1, PTK-070.

51

Chapter VII Article 2.5.5.2, PTK-070.

52 Chapter VI Article 1.1, PTK-070.

Ashurst OSP

14

Indonesia issues further regulations for CCS and CCUS
deployment – A quick guide to Presidential regulation
14/2024 and SKK Migas regulation PTK-070

If the CO2 emissions originate from sources and industries other than upstream oil & gas businessactivities, the monetization shall be in the form of revenues from the injection and storage services(storage fees).53
Contractors are required to undertake their best efforts in monetizing the implementation of CCS/CCUS
including by way of conducting marketing, entering into sale and purchase agreements and/or otherrelated contracts with counterparties54. It is unclear how such best efforts requirement would be assessedfrom time to time by SKK Migas.
Contractors must obtain SKK Migas' prior approval by submitting (i) a proposal to monetize their
CCS/CCUS operations and; (ii) a review/evaluation of the counterparties and the market potential.
Furthermore, Contractors must provide regular written reports on the implementation of monetization of
CCS/CCUS operations to SKK Migas.55
2.5

Funding & Costs

The estimated closure costs and post-closure monitoring of CCS/CCUS activities are part of the plan ofdevelopment of the Work Area and can be adjusted by the Contractor with the approval of SKK Migas56.
The estimated closure costs and post-closure monitoring of CCS/CCUS activities are to be presented
separately from the estimated abandonment and site restoration (ASR) costs for oil & gas operations as
set out in the plan of development.57

53 Chapter VI Article 1.2, PTK-070.

54

Chapter VI Article 2.1, PTK-070.

55 Chapter VI Article 3, PTK-070.

56

Chapter VII Article 2.5.3, PTK-070.

57 Chapter VII Article 2.5.3, PTK-070.

Ashurst OSP

15

Indonesia issues further regulations for CCS and CCUS
deployment – A quick guide to Presidential regulation
14/2024 and SKK Migas regulation PTK-070

Conclusion
Through the issuance of both PR 14/2024 and PTK-070, the Indonesian government has issued notless than 3 separate regulations on CCS/CCUS in the span of a year. This demonstrates the GOI's
strong commitment to advancing CCS/CCUS and the ambition to apply this technology for theabatement of CO2 emissions for domestic industries, and also to serve as a hub for the region andseek to monetize and give a second life to its increasing number of depleted reservoirs.
Despite the additional requirements and framework provided by the new regulations, more detailed
provisions are still required to provide a comprehensive and usable regulatory regime to support thecommercial development of CCS/CCUS across Indonesia. PR 14/2024 specifically calls for theissuance of further implementing regulations on certain matters such as the process for awarding
Carbon Storage Permit Areas, on the ownership and transfer of ownership of the holders of explorationand storage operation permits, and the possible monetisation and revenue streams from CCS which
we understand are to follow.
More clarity will also be required in terms of the available incentives or through imposing increased
CO2 emissions cap & trade requirements across various industrial sectors to boost the economic
prospects of commercial CCS/CCUS projects.
As a sign of optimism following the issuance of the new regulatory framework, Singapore and Indonesia
recently signed a letter of intent to work together on cross-border CCS opportunities between the twocountries. A working group comprising of Singaporean and Indonesian government representatives
will now seek to develop a legally binding bilateral agreement that will enable the cross-border transportand storage of carbon dioxide between the two countries as called upon by PR 14/2024. This is anencouraging sign of regional collaboration in this space which could pave the way to other similarbilateral agreements in the future, including with countries further afield in Asia, and help fulfil
Indonesia's ambition to become a CCS hub for the region.

Ashurst OSP

16

Indonesia issues further regulations for CCS and CCUS
deployment – A quick guide to Presidential regulation
14/2024 and SKK Migas regulation PTK-070

"Ashurst has a large team with bench depth and deep
market experience. They smoothly handle complex
matters with seamless integration between offices."
CHAMBERS 2024 ASIA PACIFIC: ENERGY & NATURAL RESOURCES

JAKARTA

Frédéric Draps

Norman Ibnuaji

Dan Trevanion

Rachelia Jumanti

Partner / Foreign
Legal Consultant

Senior Associate

Foreign Legal
Consultant

Junior Associate+62 212 996 9250

+62 212 996 9280

+62 212 996 9276

+62 212 996 9285

Email Fred

Email Norman

Email Dan

Email Rachelia

Jean-Louis Neves
Mandelli

Jessica Davies

Guy Dwyer

Partner, PerthCounsel, Sydney+61 8 9366 8154

+61 2 9258 6540

Email Jessica

Email Guy

ASIA PACIFIC

Alfred Ng
Partner, Singapore+65 6416 9522
Email Alfred

Partner, Singapore+65 6923 3429
Email Jean-Louis

17
Ashurst.com

Oentoeng Suria & Partners (Ashurst OSP) is an Indonesian firm affiliated with Ashurst, a global law firm. The Ashurst Group
comprises Ashurst LLP, Ashurst Australia and their respective affiliates (including independent local partnerships, companies
or other entities) which are authorised to use the name "Ashurst" or describe themselves as being affiliated with Ashurst,
such as Ashurst OSP. Some members of the Ashurst Group are limited liability entities. Information about Ashurst OSP canbe found in www.oentoengsuria.com, and further information on which Ashurst Group entity operates in any country canbe found on our website at www.ashurst.com.

© Ashurst 2024.