Director general proposes govt to maintain existing production-sharing system

Oil and gas director general Iin Arifin Takhyan said Monday he would propose to the government to maintain the current production-sharing system for its new oil and gas contracts.

"I will propose to the Minister of Energy and Mineral Resources to maintain the current system," Iin told Petromindo.Com.

The Ministry of Energy and Mineral Resources is still struggling to finalize the drafting of bid documents for 17 new oil and gas concession areas, which were offered to investors last year, as the customs and excise office insists that the documents include a clause that import tax be imposed on goods used for oil and gas mining projects.

Iin said the current contract system does not oblige oil and gas contractors to pay import tax on goods used for oil and gas mining activities.

"If the government includes the import tax, we will propose that contractors be given compensation by changing the current production-sharing split," he said.

The import tax proposed by the customs and excise office will increase the burden of contractors, he added.

The 17 oil and gas blocks, including seven offered in a special bidding system, are located in Aceh, South Sumatra, Banten, East Java, East Kalimantan, East Nusa Tenggara, Maluku and Papua.

The government had planned to release bid documents for the blocks last month, and it remains unclear when the documents will be made available to interested contractors. (godang)