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Govt offers oil, gas areas through ‘more flexible’ production-sharing scheme
The government says five oil and gas working areas and one exploitation working area offered across the country through the first bidding round this year come with “more attractive” terms and conditions.
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The offshore Kepodang Field in the Muriah Block is operated by Saka Energi Muriah Ltd. (SKK Migas/SKK Migas.)
T
he government has offered five oil and gas working areas and one exploitation working area across the country through a first bidding round this year with what it says are “more attractive” terms and conditions.
The Energy and Mineral Resources Ministry’s oil and gas director general, Tutuka Ariadji, said the government had improved the contractors’ split and offered flexibility in a production sharing scheme (PSC) – which means oil and gas companies in Indonesia may choose between cost recovery or a gross-split-based PSC.
“The government offers more attractive terms and conditions at this auction,” Tutuka said during the first bidding round announcement ceremony on Wednesday.
In a cost-recovery-based PSC, the government reimburses companies for upstream costs in exchange for a higher share of each company’s earnings from exploiting domestic oil and gas blocks.
Meanwhile, in the so-called gross-split scheme, companies bear upstream costs themselves, but the government receives a smaller cut of revenue determined in advance.
Read also: Oil industry welcomes possible return of cost recovery scheme
The government had also lowered the first-tranche petroleum (FTP) share to 10 percent from 20 percent to attract more bidders, Tutuka said.
