Minister hopeful of signing PSC for East Natuna block by year-end

By Godang Sitompul

Minister of Energy and Mineral Resources Jero Wacik said that the production sharing contract (PSC) for the development of the East Natuna block in Riau Islands is expected to be signed at the end of this year.

Speaking to reporters on Tuesday, Jero said that the government is still reviewing the five-year tax holiday request made by the consortium developing the block.

?We?re finalizing it (the tax holiday incentive) with the Minister of Finance. Once this is finalized with the Minister of Finance, we can process the PSC. My target is for it to be completed this year,? he said.

The minister, however, said that the five-year tax holiday incentive will only be given after the East Natuna block starts production, expected in 2024.

Jero, however, could not reveal the final decision regarding the revenue spit issue. The East Natuna consortium initially demanded a much greater revenue split of 90 percent for them and 10 percent for the government. A local media report said that the final revenue split is 55 percent for the contractor and 45 percent for the government. In return, the government is willing to give a longer contract of 50 years to the consortium, 20 years longer than the normal contract.

?I don?t remember the details. The other (issues) are already okay. The only remaining (issue) is regarding the tax holiday,? Jero said.

Meanwhile, Director General of Oil and Gas Edy Hermantoro said that the planned five-year tax holiday incentive will only be given for the development of the Natuna D-Alpha field within the East Natuna block as the field contains a high level of CO2. The 55:45 revenue split will also be applied only for the Natuna D-Alpha field, as the government will seek for greater revenue portion for areas outside the particular field.

Editing by Reiner Simanjuntak