Ministry Of Energy And Mineral Resources Prepares New Regulations Regarding Oil And Gas Result Sharing Schemes

Director of Business Development Hulu Migas Ariana Soemanto. (Photo: Maria Trisnawati/VOI)

JAKARTA - The Ministry of Energy and Mineral Resources has prepared a New Gross Split (New GS) scheme Sharing Contract to encourage upstream oil and gas investment to be even more attractive.

The New GS contract simplifies the contractor's (split) profit-sharing component in GS contracts, which previously covered 13 components to only 5 components so that it was more implementive, simple and the size of the split was also more attractive to contractors.

"In New GS, contractors can split up to 75-95 percent. While GS's contract is old, to get a decent economy, most contracts must apply for additional splits to the government, a uncertainty for Contractors," said Hulu Migas Business Development Director Ariana Soemanto in Jakarta, Friday, August 23.

In the new GS, continued Ariana, it will be even more interesting for Non Conventional Oil and Gas (MNK), where the contact can get direct splits of up to 93-95 percent. This will be interesting for Pertamina Hulu Rokan regarding the activities of the Rokan MNK.

The provisions related to the split will be further outlined in the Decree of the Minister of Energy and Mineral Resources, the amount of the split first has also been socialized to business actors. We are currently finalizing the final and in the near future we will socialize.

The newly published New GS regulation, in principle, applies to a new contract going forward. However, for existing GS contracts that have not yet received the first Plan of Development (POD-1) approval, they can submit changes to New GS. Also for non-conventional oil and gas, they can submit changes to New GS.

This New GS regulation also accommodates changes to existing gross split contracts that want to switch to cost recovery schemes.

"In addition, the cost recovery scheme contract which was signed after the new GS Permen was issued, could change to the new GS, and vice versa. So it gives flexibility in the future," added Ariana.

In principle, this gross split scheme will be attractive to contractors who have high confidence in efficiency.

Because with the GS scheme, the more efficient the contractor will be, the more profitable. In addition, the procurement of goods and services by contractors on GS contracts is more independent.

"For the government, this is policy support for contractors to have choices and flexibility in upstream oil and gas investment so that it is more attractive," said Ariana.

The government is currently preparing various policies to make oil and gas investment more attractive. As is known, new oil and gas contracts or new oil and gas blocks (on the cost recovery scheme contract) are given a split for contractors to reach 45-50 percent.

"In the past, it was only 15-30 percent. Upstream Indonesian oil and gas has recently been made more attractive to encourage production exploration and optimization," Ariana concluded.