Minister proposes to give oil and gas contractors higher revenue share

The Ministry of Energy and Mineral Resources will offer investors higher oil and gas revenue sharing splits to compensate for the planned taxes on capital goods imported to produce oil and gas in the country, the Koran Tempo newspaper reported in its Wednesday edition.

?The authority to change the revenue split (between the oil and gas contractors and the government) lies in the hands of the minister of energy and mineral resources. If the government imposes tax on capital goods like drilling equipment, I will change the split. Otherwise, investment will face problems,? Minister of Energy and Mineral Resources Purnomo Yusgiantoro said on Tuesday in Jakarta.

The government will offer up to 25 percent revenue sharing split to investors that are going to operate oil fields in the country, up from 15 percent currently. Meanwhile, the revenue split for gas-field investors will be increased to 40 percent from 30 percent currently, Purnomo added.

The finance ministry is deciding on the magnitude of the tariff and value added tax it will impose on capital goods imported into Indonesia to produce oil and gas. Currently, oil and gas companies are exempted from such taxes before they commence commercial production. (*)