Indonesia Mulls Production Contract Schemes

Monday, December 2, 2019

Indonesia considers allowing for production sharing oil and gas contracts options

Indonesia is considering letting energy companies stick with the "cost recovery" system for oil and gas production sharing contracts, the energy minister said on Monday, after the government decided to adopt a new scheme in 2017.

In 2017, Indonesia adopted a scheme known as "gross split" for oil and gas production deals, applicable to new contracts, so that contractors shoulder the cost of exploration and production in exchange for retaining a bigger portion of the oil and gas they recover.

It was a shift from the cost recovery scheme where exploration and production costs are reimbursed by the government.

Energy and Mineral Resources Minister Arifin Tasrif, who was appointed minister in October, told reporters on Monday that the plan is currently being discussed to allow for contractors to opt for "whichever (scheme) is more suitable" for them.

The base share for government under the gross split scheme is 52% for gas output and 57% for oil output, with the rest going to the contractor. Under the previous system, the government received a share of 70% for gas and 85% for oil.

Since the adoption of the newer scheme, 45 oil and gas blocks have used the gross split contracts, ministry data showed.

Djoko Siswanto, acting director general of oil and gas at the ministry, told reporters that the government may allow for the flexibility to choose as long as the companies propose for "fair costs" and show their commitment to increase production.

In 2016, prior to the adoption of the gross split system, oil and gas contractors operating in Indonesia asked for more than $11 billion reimbursement for costs, much bigger than the $8.4 billion initially planned.

Taufik Adityawarman, a director of PT Pertamina Hulu Energi, said some companies who are still in exploration stages would prefer the cost recovery scheme since they are not yet getting revenue from their operation. 


(Reporting by Wilda Asmarini Writing by Fransiska Nangoy Editing by Chizu Nomiyama)

Categories: Production Asia Regulations

Related Stories

Valeura Makes Progress with Multi-Well Drilling Campaign in Gulf of Thailand

Four Jack-Up Drilling Rig Deals Set to Bring In $129M for Borr Drilling

Yinson Production Secures $1.17B Refinancing for FPSO Maria Quitéria

Centrica and Thailand’s PTT Ink Long-Term LNG Supply Deal

Thailand's PTT to Buy LNG from Glenfarne's Alaska LNG Project

Petronas Expands Suriname Portfolio with Deepwater Block Acquisition

CDWE Wraps Up Pin Pile Installation Job for Taiwanese Offshore Wind Farm

INEOS Wraps Up Acquisition of CNOOC’s US Oil and Gas Assets

CNOOC Sees 11% Profit Growth in 2024 Driven by Record Oil Production

CNOOC Starts Production at Two New Oil and Gas Projects

Current News

EnQuest Acquires Harbour Energy’s Vietnamese Assets

Woodside Finds South Korean Partners to Advance LNG Value Chain

Valeura Makes Progress with Multi-Well Drilling Campaign in Gulf of Thailand

Santos and QatarEnergy Agree Mid-Term LNG Supply

PTTEP Hires Energy Drilling’s Rig for Southeast Asia Offshore Job

One Shelf Drilling Rig Up for New Job in India, Other for Disposal

Four Jack-Up Drilling Rig Deals Set to Bring In $129M for Borr Drilling

PTTEP Hires Velesto’s Jack-Up Rig for Drilling Campaign off Malaysia

Yinson Production Secures $1.17B Refinancing for FPSO Maria Quitéria

Centrica and Thailand’s PTT Ink Long-Term LNG Supply Deal

Subscribe for AOG Digital E‑News

AOG Digital E-News is the subsea industry's largest circulation and most authoritative ENews Service, delivered to your Email three times per week

https://accounts.newwavemedia.com