From Policy to Practice: How PTK 023 Implements MEMR Regulation 14 of 2025

Marinza Savanthy

Overview

On 6 August 2026, SKK Migas issued PTK-023/SKKIA0000/2026/S9 concerning the Implementation of Cooperation Arrangements for the Management of Portions of Working Areas to Increase Oil and Gas Production (“PTK 023“). PTK 023 serves as the implementing guideline for MEMR Regulation No. 14 of 2025, providing the operational framework and procedural guidance for the cooperation schemes introduced under that regulation.

As discussed in our previous article on MEMR Regulation 14 of 2025: What Do the New Cooperation Schemes in MEMR 14/2025 Mean for Oil and Gas Stakeholders?, the regulation established the legal basis for various cooperation schemes aimed at accelerating production from existing oil and gas assets. PTK 023 now provides further guidance on how these schemes are expected to be implemented in practice.

While PTK 023 covers all cooperation schemes contemplated under MEMR Regulation 14 of 2025, a significant portion of the guidance relates to Operation and/or Technology Cooperation (Kerja Sama Operasi dan/atau Teknologi or “KSOT“). In particular, the PTK 023 provides additional detail on partner selection procedures, qualification benchmarks, asset-specific requirements, cost and remuneration treatment, and ongoing project oversight.

More Detailed Qualification Benchmarks for KSOT Partners

MEMR Regulation 14 of 2025 already establishes the administrative, technical and financial requirements applicable to prospective KSOT partners. PTK 023 builds on these requirements by providing additional guidance on how they are assessed in practice.

In particular, PTK 023 introduces more specific benchmarks relating to technical experience, personnel competency requirements, and financial capability. For example, prospective partners may be required to demonstrate prior experience as an upstream operator or production enhancement service provider, or to maintain a minimum number of qualified personnel covering operational, subsurface reservoir and HSSE competencies. PTK 023 also provides additional guidance on the documentary evidence that may be used to demonstrate financial capability, including audited financial statements and evidence of access to funding.

These provisions provide contractors with a more structured basis for assessing whether prospective partners satisfy the requirements already established under MEMR Regulation 14 of 2025

More Detailed Partner Selection Procedures

MEMR Regulation 14 of 2025 requires contractors to evaluate prospective partners and verify compliance with the applicable qualification requirements, while providing that the evaluation and verification process will be conducted in accordance with guidelines issued by SKK Migas or BPMA. PTK 023 provides that framework by setting out a more detailed process for the selection of KSOT partners.

PTK 023 sets out a more detailed process covering, among other things, the announcement of opportunities, submission of letters of intent, utilisation of data, confidentiality arrangements, due diligence activities, proposal evaluation, verification, and partner appointment. The PTK 023 also introduces indicative timelines for a number of these stages.

PTK 023 further provides guidance on different pathways through which KSOT opportunities may arise, including opportunities identified by contractors, opportunities proposed by prospective partners, and opportunities identified by the Government or SKK Migas.

Taken together, these provisions provide a more detailed procedural framework for implementing the partner selection process contemplated under MEMR Regulation 14 of 2025. The PTK 023 also provides prospective partners with greater visibility on the stages, documentation requirements, and indicative timelines involved in pursuing a KSOT opportunity.

Asset-Specific Implementation Requirements

While MEMR Regulation 14 of 2025 permits KSOT arrangements for both idle and producing assets, PTK 023 provides separate implementation requirements depending on the type of asset involved.

For example, KSOT arrangements involving idle wells may proceed only where the contractor determines that the project does not interfere with ongoing operations or field development plans. Meanwhile, KSOT arrangements involving producing wells and producing structures are tied to the contractor’s technical requirements and, in certain cases, economic considerations. PTK 023 also allows contractors to establish more detailed asset selection criteria through their internal procedures.

This asset-specific approach reflects the differing operational and commercial considerations associated with idle and producing assets and provides additional guidance on how KSOT opportunities may be identified and evaluated.

Production Baseline Determination

MEMR Regulation 14 of 2025 requires contractors to establish a baseline production level for producing wells and producing fields or structures, with remuneration calculated based on production exceeding that baseline. PTK 023 supplements this framework with additional implementation guidance.

In particular, PTK 023 clarifies that baseline production is only required for producing assets and is not required for idle wells, structures, or fields. The PTK 023 also provides that contractors may engage an independent party in establishing the baseline where necessary.

Given that partner remuneration is linked to production above the approved baseline, the determination of the baseline remains an important element of the commercial framework established under MEMR Regulation 14 of 2025.

Costs and Remuneration Treatment

MEMR Regulation 14 of 2025 establishes the remuneration framework applicable to KSOT arrangements, including the formula for calculating remuneration and the corresponding treatment under Cost Recovery and Gross Split PSCs. PTK 023 builds on these provisions by providing further guidance on how the framework is expected to operate in practice.

In particular, PTK 023 provides additional guidance on the treatment of operating costs, recognition of remuneration, and the allocation of costs and benefits between contractors and partners under different PSC regimes. The PTK 023 also distinguishes between projects involving wells and those involving fields or structures and provides separate approaches for Cost Recovery and Gross Split PSCs.

For example, PTK 023 clarifies the treatment of partner remuneration as an operating cost under Cost Recovery PSCs and provides guidance on the treatment of such remuneration under Gross Split PSCs. The PTK 023 also includes specific provisions addressing the treatment of costs incurred in implementing KSOT projects, including certain distinctions between well-based and field-based projects.

These provisions may be particularly relevant for contractors and prospective partners in assessing the commercial implications of a proposed cooperation arrangement. In this respect, PTK 023 provides greater visibility on how the remuneration framework introduced under MEMR Regulation 14 of 2025 is intended to interact with existing PSC structures.

Key Takeaways

As discussed in our earlier article What Do the New Cooperation Schemes in MEMR 14/2025 Mean for Oil and Gas Stakeholders?, MEMR Regulation 14 of 2025 established the legal basis for new cooperation schemes intended to support increased oil and gas production. PTK 023 builds on that framework by providing the operational and procedural guidance needed to implement those schemes in practice.

PTK 023 provides additional detail on a number of implementation matters that were addressed more generally under MEMR Regulation 14 of 2025. In particular, PTK 023 provides additional implementation guidance on partner selection, qualification benchmarks, asset-specific requirements, cost and remuneration treatment, and project oversight.

Together, these provisions provide a more comprehensive framework for the structuring and implementation of cooperation projects under MEMR Regulation 14 of 2025. As contractors and prospective partners continue to evaluate opportunities under the cooperation scheme framework, PTK 023 is likely to become an important operational reference for the development of future production enhancement projects in Indonesia.

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