IPA protests plan to change revenue sharing mechanism

By Febry Silaban

Oil and gas production sharing contractors operating in the country expressed objection to the plan by the Ministry of Energy and Mineral Resources to change the existing revenue sharing mechanism.

Executive Director of the Indonesia Petroleum Association (IPA) Dipnala Tamzil said Tuesday that the oil and gas contractors wanted the existing revenue sharing mechanism as stated in their contracts to be maintained.

?According to the production sharing contracts, the production sharing contractors have the rights to take away their portion of production,? Dipnala said.

The ministry plans to change the existing revenue sharing mechanism into a profit sharing mechanism, giving the contractors cash instead of split of the production.

Secretary of the upstream oil and gas authority SKK Migas Gde Pradnyana said that the contractors opposed the proposed change of the revenue sharing mechanism as they want to ensure crude supply for their refineries overseas.

Elsewhere, Dipnala urged the government to concluded and unveil this year the planned change in the regulation regarding oil and gas contract extension and termination. Speedy publication of the new regulation is required by the contractors to help provide certainty for them in making new investments.

Dipnala said that 20 oil and gas production sharing contracts will expire within the next five years, which is equivalent to 30 percent of the current national oil production.

"Whereas in the next 10 years, the PSCs which will expire are equivalent to 60 percent of national oil production capacity at this time," he said.

Editing by Reiner Simanjuntak