Attract Investors, Ministry Of Energy And Mineral Resources Issues Gross Split Regulation

Ministry of Energy and Mineral Resources (photo: Doc Antara)

JAKARTA - The Ministry of Energy and Mineral Resources (ESDM) has issued the latest regulations related to contracts for oil and gas products (oil and gas) to increase the attractiveness of oil and gas investment in Indonesia.

This new regulation is contained in the Regulation of the Minister of Energy and Mineral Resources Number 13 of 2024 concerning Contracts for Gross Split Sharing Results, this Permen replaces the Regulation of the Minister of Energy and Mineral Resources Number 8 of 2017 concerning Contract Sharing Gross Split Results. In addition, it was also determined that the Minister of Energy and Mineral Resources Decree No. 230.K/MG.01.MEM.M/2024 concerning Guidelines for Implementation and Contract Components for Gross Split Results

Director of Upstream Oil and Gas Development Ariana Soemanto explained that this regulatory update was carried out to maintain a balance between the interests of contractors and the Government.

One of the important points in this rule is that the certainty of the profit sharing received by the contractor can reach 75-95 percent. In the old gross split contract, the contractor yield sharing is very varied, can be very low, up to zero percent under certain conditions.

"The certainty is that 75-95 percent of the profit sharing has a contractor. In the past, it could be very low, even up to 0 percent, we can correct it. In addition, the profit sharing is not competitive, the evidence is that 15 of the 26 KKKS apply for incentives or discretion," explained Ariana, quoted Wednesday, October 2.

Selain itu, Ariana menyampaikan, aturan gross split baru ini juga membuat Wilayah Kerja Migas Non Conventional lebih menarik, karena bagi hasil untuk kontraktor dapat mencapai 93-95 persen di awal. Hal ini dapat segera diterapkan pada WK GMB Tanjung Enim dan MNK Rokan.

Then, said Ariana, the parameters that determine the amount of yield-sharing numbers for contractors are simplified from 13 parameters to only 5 parameters, to make the calculation more implementive and interesting in the field.

"The fourth point is, this is not solely to encourage this new gross split, but here we provide a choice of flexibility, whether to use a gross split or cost recovery, please, please move. In accordance with the taste of the contractor," he continued.

The points of change in the Revenue Sharing Contract Permen include simplification of the number of components. Of the 13 additional components, the profit sharing is simplified to only 5, namely the number of reserves, field locations, the availability of infrastructure, oil prices, and natural gas prices.

The second point is the parameters according to field data. The value of the component parameters is determined from the statistical study of data in the last 5 years, namely the total number of POD reserves in all fields, the average location and depth of the field, as well as the average price of Indonesian Crude Price (ICP), LNG plates, and domestic gas.

"So after the 5-year evaluation, later you will see the reserves and the POD has empirical evidence that the data for the last 5 years related to the discovery of these reserves will form the numbers in our Kepmen. Likewise with the location of the depth, the price of the ICP, why the price taken at the center is all based on data on the realization in the last 5 years," explained Ariana.

In addition, it is also regulated the total sharing of competitive results. Where the value of the product sharing (before tax) of conventional oil and gas KKKS is in the range of 75 percent to 95 percent.

Based on the study of the effective royalty rate, access to gross revenue, and incentives. Then there are also rules regarding the exclusivity of MNK, namely the value of the KKKS MNK results sharing (before tax) using a fixed share of 93 percent for oil and 95 percent for gas, based on a study of economic comparison with the field at Eagleford.

Finally, regarding procedures, requirements for changing the form of contracts and flexibility. This rule provides arrangements related to changes in the form of contracts for profit sharing from PSC cost recovery to gross splits or vice versa. With the transition provisions for contracts that have been previously signed.