Government to apply gross split scheme in oil, gas contract early 2017
Monday, December 12 2016 - 04:05 AM WIB
Petromindo
Minister of Energy and Mineral Resources Ignasius Jonan is currently drafting a new ministerial regulation on the application of gross split mechanism in oil and gas contract, to replace the current production sharing contract (PSC) system.
Deputy Minister of Energy and Mineral Resources Arcandra Tahar said in a statement Sunday that the gross split mechanism is expected to be applied starting January 2017.
He said that the gross split mechanism will only be applied in new contracts as existing contracts must be honored until their expiry.
Arcandra said that by applying the gross split mechanism, there will be no longer requirement for the government to reimburse the operational cost of oil and gas contractors through the so-called cost recovery mechanism.
The gross split mechanism has been applied in non-conventional oil and gas contracts as stipulated by Minister of Energy and Mineral Resources Regulation No 38/2015.
Meanwhile, Arcandra said that regarding the Offshore North West Java (ONWJ) block contract, which will expire on January 17, 2017, he could not yet ascertain the gross split mechanism will be applied in the new contract for the block. ?Don?t force something that isn?t ready yet,? he said.
Editing by Reiner Simanjuntak