The Ministry Of Energy And Mineral Resources Continues To Issue Policies To Attract Oil And Gas Investors
JAKARTA - The Ministry of Energy and Mineral Resources continues to attract investors in the Indonesian oil and gas (oil and gas) sector. This is driven by increased policies since 2021.
Director of Upstream Oil and Gas Development of the Ministry of Energy and Mineral Resources Ariana Soemanto said the policy included the implementation of new production sharing contract (PSC) requirements and incentives, exploration privileges, and upstream oil and gas incentives.
"The Ministry of Energy and Mineral Resources since 2021 has stepped up policies to increase investment in exploration and production. The first policy is the enactment of new terms and conditions for cooperation contracts. There are cost recovery and gross split contracts. The government no longer requires contractors to use gross splits. This is proof that the government is adapting," said Ariana quoting Antara.
According to him, through the Regulation of the Minister of Energy and Mineral Resources No. 35 of 2021, which regulates the new PSC terms and conditions, prospective contractors for cooperation contracts can have the flexibility of contract schemes whether with cost recovery or gross split.
The government no longer requires contractors to use contracts with a gross split scheme, and that is proof that government policies continue to adapt to industrial needs.
The regulation contains several things that appeal to potential investors, including increasing PSC requirements and provisions, cheaper bank guarantees of US$500,000 for joint study, direct offering without joint study, to exclusivity of unconventional hydrocarbon, which can be done by conventional contractors who already exist and joint study costs as operational costs.
Then, regarding the exploration process, Ariana explained, the procedures for exploratory data facilities have also become easier with the commitment to explore being diverted to open areas and data membership costs can be recovered.
The government also provides incentives during the exploration period with an exploration period that can be extended from a maximum of 10 years for contractors, who still want to work on finding backups.
"For example, the discovery of five TCF gas reserves at WK North Ganal, East Kalimantan. Without an extension of the exploration period, this gas reserve will not be found. From this policy, North Gang reserves have been found which prove that government and contractor cooperation play an important role in encouraging exploration," he said.
Meanwhile, to provide upstream oil and gas incentives, Ariana emphasized that the government is always open to negotiating to help contractors.
Various forms of fiscal or tax incentives can boost the economy of oil and gas projects.
Based on Ministerial Decree Number 199 of 2021 concerning Hulu Incentive Guidelines, 12 contractors have received an increase in the project economy from the incentives provided, while the other 10 contractors are still in the process of evaluation and negotiation.
Ariana also explained the upcoming policy innovations that will be published to support the upstream oil and gas industry, including The New Simplified Gross Split PSC and the development of carbon capture storage (CCS) projects.
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"In the future, at least two regulations are being prepared, namely The New Simplified Gross Split PSC, which is a comprehensive overhaul of existing models, including the distribution of more competitive profit sharing and a clearer contract form change procedure. In addition, we are also formulating the Regulation of the Minister of Energy and Mineral Resources on CCS Development Procedures," said Ariana.
Ariana also said that the government continues to adapt to accommodate investor interests while still considering national interests.
"We, the government, always assume that we are in an investor position, but of course we still have to maintain a fair position between national interests and the wishes of investors," he said.