Government to cut down oil, gas cost recovery budget
Thursday, September 14 2017 - 01:39 AM WIB
Courtesy of SKK Migas
The government plans to cut down the oil and gas cost recovery budget covered next year to around US$11.39 billion through various efficiency measures, Bisnis Indonesia reported on Thursday.
The paper quoted Secretary of upstream oil and gas authority SKK Migas, Arief Handoko as saying that this is lower than the initial cost recovery budget estimate of $13.29 billion.
He said that the Ministry of Energy and Mineral Resources (MEMR) has proposed the lower cost recovery budget in a letter to the Ministry of Finance in February of this year. The ministry has also proposed to further cut down cost recovery budget through 2022, when the budget is projected to reach only $9.28 billion.
The MEMR has earlier this year introduced a new gross split policy, replacing the cost recovery mechanism. Under the gross split scheme, the government would no longer reimburse the expenses of oil and gas contractors in return for high output split. The policy will be first implemented in new oil and gas contracts. (*)