Govt to offer PSC new contact scheme
Tuesday, August 4 2015 - 12:43 AM WIB
This was said by Djoko Siswanto, Director of Upstream Business Oversight at the Directorate General of Oil and Gas, during the 4th United States-Indonesia Energy Investment Roundtable at Shangri-La Hotel on Monday.
The new contract schemes aim to drive exploration activities and oil and gas production. Investors are expected to be interested in the blocks if they are offered with several contract options. The new contract schemes are ?gross split? and ?sliding scale?. Under these schemes, the government will no longer reimburse the contractors? expenses, a practice known as ?cost recovery?. Instead, investors will be allowed to take the largest portion of first production so that they can recoup their investment. Once they have recouped most of their investment, the government will get a bigger production.
He noted that both the PSC scheme and the new schemes have their own advantages and disadvantages.
?The new system will be applied to the new blocks. It?s up to the investors to decide. Some of them may prefer the PSC system because they will get their costs reimbursed by the government. In the new scheme, contractors will be forced to carry out efficiency because they cover the costs themselves,? Djoko said.
He said the Gross Split and Sliding Scale system is applied in various countries, including Australia. Thanks to the system, development of oil and gas in offshore areas is growing well in Australia
Oil and Gas Law No. 22/2001 allows the application of contractual schemes other than PSC, he said, adding that a ministerial regulation on the new contractual scheme is being drafted and is expected to be completed this month.
Minister of Energy and Mineral Resources Sudirman Said noted himself during the recent 39th IPA Convention and Exhibition that it is time to make change and to introduce new contractual schemes.
Editing by Johannes Simbolon