Energy Disputes in Indonesia: A Complete Guide (2026)

Originally published in Lexology Panoramic: Energy Disputes 2026.

By Setyawati Fitrianggraeni, S.H., LL.M., FCIArb., FAIADR, Reynalda Basya Ilyas, Aga Kristiana Silaen, Marcel Raharja, and Irvena A Dewanto

Indonesia’s energy sector is changing faster than its disputes can keep up with. New renewable energy legislation is being drafted, carbon trading and carbon storage rules are now in place, and long-term oil and gas investments face a shifting mix of contract, regulatory, and investment risks. This guide maps the full landscape of energy disputes in Indonesia in six parts, from the constitutional basis of state control over energy resources to arbitration, regulation, and investment protection.

Why energy disputes in Indonesia look different

Energy disputes in Indonesia rarely turn on a single contract or a single regulator. A typical dispute touches several layers at once: the constitutional rule that energy resources are controlled by the state, a cooperation contract with a state-owned or state-mandated counterparty, sector regulation issued by the Ministry of Energy and Mineral Resources (MEMR), and, for foreign investors, treaty protection. The chapter this guide is based on states the law as of 18 February 2026, and its structure reflects that layered reality. Each part below follows one layer, so readers can go directly to the issue they face.

The commercial background matters too. Indonesia has historically relied on fossil energy, principally coal and crude oil. Industrial energy use rose by 9 per cent in 2023. Coal remained dominant at 56.9 per cent of industrial energy use, renewables accounted for 6.52 per cent, and industrial-sector emissions were roughly 460 million tonnes of carbon dioxide equivalent. Fossil fuel subsidies continue to slow decarbonisation, while the government invests in hydrogen, carbon capture and storage, and energy efficiency. Against that background, the Just Energy Transition Partnership (JETP) coalition has committed US$20 billion over three to five years, aiming to cap power-sector emissions at 290 million tonnes of carbon dioxide equivalent in 2030, reach net-zero emissions in the power sector by 2050, accelerate the deployment of renewable energy so that renewable energy comprises at least 34 per cent of all power generation by 2030, and retire coal power plants early. Disputes over project timelines, tariffs, land, and emissions obligations should be read in that context.

The legal framework at a glance

The starting point is Article 33, paragraphs (2), (3) and (5), of the 1945 Indonesian Constitution, which places important production branches and the earth, water, and natural resources under state control for the greatest prosperity of the people. The implementing framework includes Law No. 22 of 2001 on Oil and Gas, as amended by Law No. 6 of 2023; Law No. 30 of 2007 on Energy; Law No. 4 of 2009 on Mineral and Coal Mining, as amended by Law No. 3 of 2020; Law No. 30 of 2009 on Electricity, as amended by Law No. 6 of 2023; and Law No. 21 of 2014 on Geothermal Energy, as amended by Law No. 6 of 2023. Energy contracts are in principle governed by general civil and commercial law, supplemented by sector-specific rules and widely used industry forms such as the FIDIC Conditions of Contract for Construction.

Update and trends: what changed most recently

Several recent regulations are reshaping the sector, and several of them are likely to generate the next wave of disputes:

• Government Regulation No. 33 of 2023 on Energy Conservation, which expects central and regional governments to run programmes on preserving energy resources, increasing energy efficiency, and managing energy use.
• Presidential Regulation No. 11 of 2023 on Additional Concurrent Government Affairs in the Field of Energy and Mineral Resources in the Subfield of New Renewable Energy, which strengthens regional governments so they can move faster on the national renewable energy target.
• MEMR Regulation No. 2 of 2023 on carbon capture and storage (CCS) and carbon capture, utilisation, and storage (CCUS) in upstream oil and gas business activities.
• MEMR Regulation No. 16 of 2024 on carbon storage activities in carbon storage permit areas.
• MEMR Regulation No. 13 of 2024 on gross split production sharing contracts (replacing MEMR Regulation No. 8 of 2017), which improves the contractor base split, allows flexibility between gross split and cost-recovery systems, and reduces bureaucracy for technically complex or deepwater assets, while SKK Migas retains significant discretion in approval and monitoring.
• Presidential Regulation No. 110 of 2025 on the Implementation of Carbon Economic Value Instruments and National Greenhouse Gas Emission Control, which replaced Presidential Regulation No. 98 of 2021 and sets out the mechanism for carbon trading in Indonesia for domestic and foreign actors.
• Law No. 16 of 2025 on the Fourth Amendment to Law No. 19 of 2003 on State-Owned Enterprises (SOEs), Article 4B of which provides that profits or losses incurred by an SOE constitute the profits or losses of the SOE itself, thereby reducing anti-corruption exposure in commercial transactions and improving the bankability of SOE-linked upstream projects, including joint venture and farm-in structures involving Pertamina group entities.
• Law No. 20 of 2025 on the Criminal Procedure Code (Kitab Undang-Undang Hukum Acara Pidana), which introduces the Deferred Prosecution Agreement (Perjanjian Penundaan Penuntutan) for corporate defendants (Article 328), allowing enforcement outcomes to be structured around remediation and compliance without suspending operations. This is commercially material for long-term production sharing contract investments because it lets enforcement risk be priced and governed rather than remaining binary.

The Legislative Body is also drafting laws on new and renewable energy. When enacted, those laws will affect national energy policy and, by a domino effect, the energy business sector, including energy consumption.

Contents of this guide

1. General: Energy Development and the Role of Government in Indonesia. Development areas, new regulation, the energy mix and transition, contract frameworks, and the constitutional basis of state control.
2. Substantive Commercial and Civil Law: Contracts, Liability, and Performance in Indonesian Energy Projects. Industry-standard forms, contractual interpretation, liability for default and unlawful acts, force majeure and performance excuses, nuisance, and strict liability.
3. Procedural Commercial and Civil Law: Enforcement, Arbitration, and Jurisdiction in Indonesian Energy Disputes. Dispute clauses, enforcement, arbitration preferences, settlement privilege, privacy, and jurisdiction.
4. Regulatory: Agencies, Infrastructure Access, Judicial Review, Fracking, and Market Entry in Indonesian Energy. The relevant agencies, access rights for new entrants, challenges to regulator decisions, hydraulic fracturing, and barriers for foreign companies.
5. Other Issues: Sovereign Boundaries, Energy Treaties, Investment Protection, and Cybersecurity in Indonesian Energy. Boundary disputes, treaty frameworks, investor protection including expropriation compensation, and cybersecurity standards.

Contact

For advice on an energy dispute or project in Indonesia, contact Anggraeni and Partners at connect@ap-lawsolution.net.