IPA sees positive changes in revise gross split regulation
Monday, September 4 2017 - 10:04 AM WIB
Petromindo
The Indonesian Petroleum Association (IPA) welcomes the newly revised Minister of Energy and Mineral Resources regulation on gross split oil and gas production sharing contract, describing it as positive change toward improving competitiveness of the country?s upstream sector.
?IPA sees there are positive changes in the efforts to increase the Indonesian oil and gas industry competitiveness in the revised ministerial regulation on gross split,? said IPA Executive Director Marjolijn Wajong in a statement on Monday, referring to the newly issued Ministerial Regulation No 52/2017, which is a revision of Ministerial Regulation No 8/2017.
She said that amid the current difficulties faced by the global oil and gas industry, which has significantly cut down investment expenditure and has been very selective in making new investment in the wake of the weak oil price environment, industry players need investment climate with strong legal certainty and competitive fiscal terms. She added that each oil and gas fields has different characteristics thus require different treatment to make them commercially feasible.
Marjolijn said that among of the positive changes in the new gross split regulation are increase in the magnitude of a number of split variables which will help improve field economics; addition in progressive split (gas price) and adjustment and increase in magnitude of progressive split in the early phase of production; and minster discretion in providing additional split is no longer limited? and incentives given for fields beyond first plan of development (POD 1).
She said that IPA also sees optionality to maintain current system in revised oil and gas contract.
Marjolijn said that IPA has provided its recommendations to the government regarding taxation system in the gross split mechanism, and the industry is currently waiting for the tax ruling. ?We hope the government to focus on the implementing details so that the gross split business process can be seen as more simple,? she said.
Editing by Reiner Simanjuntak