The State Should Govern Oil and Gas for People’s Prosperity


Oil and gas are natural resources and vital commodity which many people rely on. An oil and gas industry possesses vital roles in national economy so that government should govern the sector to people’s prosperity.

In a Focus Group Discussion (FGD) on Revealing Constitutional Design of Oil and Gas Governance organized by Law Faculty of Universitas Muhummadiyah Yogyakarta (UMY) collaborating with Law and People’s Prosperity Center of UMY and Universitas Muhammadiyah Jakarta on Saturday (8/10), a lecturer of Law of University of Gadjah Mada (UGM), Prof. Dr. Sulistiowati stated, “This industry is essential so that it may be beneficial for national development. Thus, government should manage it well.”

Sulis mentioned two phases of oil and gas management, namely upstream and downstream phase. “Upstream refers to exploration and excavating to find oil locations. If the oil is discovered, the oil will be lifted, delivered, and shipped,” she informed.

“First step petroleum should be employed for Domestic Market Obligation (DMO), and the rest can be exported.

On Decree of Constitutional Court No. 36/PPU-X/2012, oil and gas governance includes five functions. First, it is a state mandate to make policy and actions to arrange, set, manage, and monitors great objectives. Second, setting (regelendaad) are undertaken by legislation authority of House of Representatives (DPR) and government, and governmental regulation. Third, arrangement (bestuurdad) is carried out by government to provide and take facility license (vergunning), license (licentie), and concession (concessie).

“Fourth, management (beheersdaad) is performed through share-holding or institutional instruments that state, more specifically government, utilizes their authority on resources. Fifth, monitor was done by a state or government to control that the authority is used for people’s prosperity,” Sulis inserted.

Head of Law and People’s Prosperity Center, Dr. Mukti Faajar Nur Dewata, S.H., M.Hum. informed, “This discussion is conducted based on normative facts that a nation establish a state to create prosperity. Who will be responsible for coining the prosperity? Is it economic, political, or law sector? This FGD aims at criticizing and analyzing what regulation impacts on social prosperity.”

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