Government discusses terms and conditions for eight PSCs

By Bonha Ventura Sebayang

Courtesy of ESDM

The Ministry of Energy and Mineral Resources is currently drafting the terms and conditions of new production sharing contract (PSC) of eight oil and gas blocks which will be transferred to state-owned oil and gas firm PT Pertamina once their current contracts expire this year and next.

Director General of Oil and Gas at the ministry IGN Wiratmaja Puja said in a statement on Saturday that discussions include assessment of the economic value of the eight blocks.

The eight blocks to be transferred to Pertamina are Attaka, South East Sumatera, East Kalimantan, Tengah, Sanga-Sanga, North Sumatera Offshore, Ogan Komering, and Tuban.

The new contracts will apply the so-called gross split scheme, under which production and operating costs will not be reimbursed by the government via the cost recovery mechanism.

Following the introduction of a new ministerial regulation, Pertamina as the new contractor for the eight oil and gas blocks will be required to bear the unrecovered investment cost of the previous contractors. Wiratmaja said the new policy is aimed at encouraging contractors to maintain investment in blocks toward the end of their contracts in a bid to prevent production from falling down.

Editing by Reiner Simanjuntak