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Ada Pertanyaan? Hubungi Kami Nadia Maharani
In a bid to pursue all possible means of boosting the development of the nation’s energy sector and economy as a whole, the government has come up with some new ways of attracting investors to the country's energy sector.
Following the government's successful achievement in gaining US support regarding its energy development, the government has wasted no time in drafting a regulation relating to its oil and gas sectors in order to offer businesses new working areas regulated under a new contract scheme that differs markedly from the current profit-sharing contract (PSC).
The new scheme incorporates a gross-split mechanism, hence the cost-recovery mechanism will no longer be applied. The previous cost-recovery mechanism was seen as time consuming due to its lengthy approval process and, moreover, these rules only benefited one party once the oil and gas extraction had been undertaken commercially.
Djoko Siswanto, the current Director for Upstream Oil and Gas Businesses, has ensured that the new contract scheme should lead to an increase in exploration and lifting activities. By having more contract options, it is hoped that more investors will be attracted to the country. The new contract scheme incorporates both gross-split and sliding-scale mechanisms.
The gross-split scheme offers contractors a larger share of the output proceeds during the first year of production in order that they may recover their preliminary costs, and this new mechanism is seen as being beneficial for both the government and the contractor(s).
“Once a contractor's initial investment has been covered, then the share for the government increases,” explained Mr. Siswanto during the Fourth US-Indonesia Energy Investment Roundtable, which was held in Jakarta on Monday.
Mr. Siswanto explained that each oil and gas businesses may select the working contract that would work best for them, as each of the new working contracts had its advantages and disadvantages.
“It’s up to the contractors to decide what their best interests are. Some may prefer the PSC due to the substitution of cost recovery. Under this system, however, the working contract (KKKS) will have to be efficient because the contractors will be paying their own costs,” concluded Mr. Siswanto.
The gross-split scheme has been adopted by a number of countries, including Australia, who have been managing their deep-water oil and gas projects under such a scheme, with positive results.
This new scheme falls under the broader umbrella of the country's Oil and Gas Law, and further rules will be drawn up in the new Ministry of ESDM Regulation, which is due to be completed by the end of the month.
(hot/ja/sp)
Nadia Maharani
In a bid to pursue all possible means of boosting the development of the nation’s energy sector and economy as a whole, the government has come up with some new ways of attracting investors to the country's energy sector.
Following the government's successful achievement in gaining US support regarding its energy development, the government has wasted no time in drafting a regulation relating to its oil and gas sectors in order to offer businesses new working areas regulated under a new contract scheme that differs markedly from the current profit-sharing contract (PSC).
The new scheme incorporates a gross-split mechanism, hence the cost-recovery mechanism will no longer be applied. The previous cost-recovery mechanism was seen as time consuming due to its lengthy approval process and, moreover, these rules only benefited one party once the oil and gas extraction had been undertaken commercially.
Djoko Siswanto, the current Director for Upstream Oil and Gas Businesses, has ensured that the new contract scheme should lead to an increase in exploration and lifting activities. By having more contract options, it is hoped that more investors will be attracted to the country. The new contract scheme incorporates both gross-split and sliding-scale mechanisms.
The gross-split scheme offers contractors a larger share of the output proceeds during the first year of production in order that they may recover their preliminary costs, and this new mechanism is seen as being beneficial for both the government and the contractor(s).
“Once a contractor's initial investment has been covered, then the share for the government increases,” explained Mr. Siswanto during the Fourth US-Indonesia Energy Investment Roundtable, which was held in Jakarta on Monday.
Mr. Siswanto explained that each oil and gas businesses may select the working contract that would work best for them, as each of the new working contracts had its advantages and disadvantages.
“It’s up to the contractors to decide what their best interests are. Some may prefer the PSC due to the substitution of cost recovery. Under this system, however, the working contract (KKKS) will have to be efficient because the contractors will be paying their own costs,” concluded Mr. Siswanto.
The gross-split scheme has been adopted by a number of countries, including Australia, who have been managing their deep-water oil and gas projects under such a scheme, with positive results.
This new scheme falls under the broader umbrella of the country's Oil and Gas Law, and further rules will be drawn up in the new Ministry of ESDM Regulation, which is due to be completed by the end of the month.
(hot/ja/sp)