The Ministry Of Energy And Mineral Resources Has Prepared A Number Of Incentives To Encourage The Oil And Gas Sector

JAKARTA - The Ministry of Energy and Mineral Resources (ESDM) seeks to revive the oil and gas sector with a series of policies.

It is known, the Ministry of Energy and Mineral Resources has perfected its exploration and exploitation incentive policy since 2021.

In addition, there is another supporting regulatory policy that is being finalized. Oil and gas investments in the future will be even more excited, especially natural gas as part of the energy transition.

The last Giant oil disclosure was the Cepu Block in the early 2000s. However, for natural gas there has been a giant disclosure in the last 2 years, namely in the South Andaman Block, Andaman II Block and North Ganal Block. The Ministry of Energy and Mineral Resources has improved policies and upstream oil and gas incentives so that exploration is more attractive. In addition, new policies are also being prepared," said Upstream Business Development Director Migas Ariana Soemanto, quoted Monday, June 10.

Ariana said, there are at least three major policies that make oil and gas activities more attractive in the last 3 years.

First, the policy of improving the auction terms and oil and gas block contracts. This includes, among others, contractor splits can reach 50 percent, minimum bonus signatures, direct oil and gas block bidding auctions without joint study, bank guarantees are cheaper, and the type of contract can be gross split or cost recovery.

"The proof that this improvement policy has succeeded is that 21 new oil and gas blocks have been obtained since this repair was carried out in 2021. The number of new blocks has increased compared to the period before the policy was implemented. Currently, the Ministry of Energy and Mineral Resources has savings of more than 50 oil and gas blocks which are being reviewed for auction in the next few years," said Ariana.

Second, the exploration privilege policy. Contractors can move the commitment of exploration activities to open areas outside the blocks they are working on.

In addition, the extension of the exploration period is 10 years, and the additional exploration time is more than 10 years. If this policy doesn't exist, then North Ganal's gas disclosure might not happen," Ariana explained.

Third, to increase the upstream oil and gas incentives for the Decree of the Minister of Energy and Mineral Resources Number 199 of 2021. This policy is to improve the economy of contractors in the middle of the road, through improvement of contractor splits, investment credit, accelerated depreciation calculations and parameter improvements that affect other economies.

The policies/incentives that are being finalized are the Gross Split New Profit Sharing Contract Policy through the Regulation of the Minister of Energy and Mineral Resources. The new policy is an improvement that includes simplification of contract parameters from 13 variables to 5 variables to make it more implementative, certainty of more attractive splits.

In addition, there is also an additional split for non-conventional oil and gas (MNK), this is important as an MNK stimulus to be more enthusiastic.

Another policy that is still under discussion is the Revision of PP Number 27/2017 and PP Number 53/2017 related to tax treatment at upstream oil and gas activities.