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Jakarta Post

Cost recovery or gross split in oil, gas contracts?

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Jakarta   /   Fri, March 13, 2020   /  04:26 pm
Cost recovery or gross split in oil, gas contracts? The good intention to boost investment in the oil and gas industry should be appreciated by all stakeholders. However, I beg to differ. (Shutterstock/File)

The gross split system was introduced in January 2017 in place of the old cost recovery scheme for oil and gas. However, the energy and mineral resources minister decided in late 2019 to allow companies bidding for new blocks or contract extensions to choose between the two contract mechanisms. The good intention to boost investment in the oil and gas industry should be appreciated by all stakeholders. However, I beg to differ. In each game (system), the rules are set by the organizer, who has the authority to maintain, or change, them. The players who are interested are welcome to join the game, assuming they are comfortable with the rules. In this case, the game plan is set by the government and the players are the investors who are interested in risking their money for profit over time. Seeking high returns is intrinsic to an investor just as it is the duty of the government ...

Disclaimer: The opinions expressed in this article are those of the author and do not reflect the official stance of The Jakarta Post.