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Jakarta Post

New fiscal incentives to boost oil exploration

  • Madjedi Hasan

Jakarta   /   Mon, October 3 2016   /  08:56 am

In order to attract oil and gas companies to invest more in the upstream oil and gas sector, the Indonesian government has planned to provide a set of new incentives for the industry.

The tax and non-tax incentives will be offered in the upcoming revision of Government Regulation No. 79/2010 on cost recovery and tax treatments for the upstream oil and gas industry. Also, the planned incentive in the revised regulation will include a progressive split sliding-scale concept.

With a progressive split concept, there will be a new regime in which the government and contractors can share the pain and the gains. This means that the government will receive a higher share of the revenues when the price of oil climbs, but will share in the losses in case the price plunges.

The idea and concept of the progressive split in the Indonesian production sharing contract (PSC) schem...