STRATEGIC ANALYSIS OF GROSS SPLIT PSC REGULATION IN INDONESIA’S OIL AND GAS UPSTREAM SECTOR INDUSTRY

• Main Author: Rahmania/ 29116017, Alliya
• Format: Theses
• Language: Indonesia
• Online Access: https://digilib.itb.ac.id/gdl/view/25393
• Institution: Institut Teknologi Bandung

Indonesia is one of the countries that has high potential reserve rates of oil and gas. According to Ignasius Jonan as Minister of Energy and Mineral Resources (2017), Oil and gas industry is one of the Indonesia’s backbone because its contribution to the non-tax state revenue (Penerimaan Negara BukanPajak) is high. In 2017, oil and gas sector contributed to the PNBP around IDR 85.6 trillion and it also contributed IDR 49 trillion to the PajakPenghasilan (PPh). The most important thing is Indonesia needs to adapt its fiscal terms to attract investment in Exploration or risk losing further investment to other countries (IHS Markit, 2017). Cost Recovery PSC is regulated by PP no. 79 Tahun 2010 which summarized as all the costs that incurred in the exploration and production activities are cost recoverable by the states. On the other hand, Gross Split PSC is regulated by Permen no. 8 Tahun 2017 and revised by Permen no. 52 Tahun 2017 and Gross Split PSC summarized as all the operational cost will be bear by the contractor hence, government will gain the share without recovers any costs. <br /> <br /> The purpose of this research is to formulate a proper strategy so that Indonesia can increase its Gross Split PSC performance and get the right track to accomplish its vision. To formulate the proper strategy, in this research the author performed 1. External environment analysis using PEST Analysis; 2. Industry environment analysis using Resource-based View; 3. Problem solving strategy using IE Matrix and TOWS Matrix. <br /> <br /> The outcome of the research indicates that Indonesia needs to enhance its fiscal terms by change Cost Recovery PSC into the Gross Split PSC. To reach the Government’s objectives of Gross Split PSC, further strategy needs to be formulated in order to get the best win-win solution for both Government and Contractors. The suggested functional strategies are Government should develop its policies, behaviors, and integrated web-based bureaucracy system to attract investors; open bidding for high reserve rates fields; socialization program to inform investors and contractors about oil and gas regulations; enhance efficiency in oil and gas activities; maximize incentives to make favorable agreement among contractors and government; cutting down the bidding process time by simplify the Work Program and Budget (WP&B); and Encourage contractors conduct all oil and gas exploration and production activities in most effective way to face the uncertainty. <br />