OPERATIONS AND PROJECT DEVELOPMENT STRATEGY IN PHE ONWJ TO SUSTAIN THE BUSINESS IN IMPLEMENTING GROSS SPLIT PRODUCTION SHARING CONTRACT

• Main Author: SAHROINI (NIM 29115723), NANANG
• Format: Theses
• Language: Indonesia
• Online Access: https://digilib.itb.ac.id/gdl/view/29526
• Institution: Institut Teknologi Bandung

Oil & gas companies in Indonesia are facing a new challenge since the government changed the production sharing contract from cost recovery become gross split through Ministerial Decree of MEMR (ESDM) No. 8/2017 and No. 52/2017, Kontrak Bagi Hasil Gross Split. The biggest challange in Gross Split PSC is all the capital cost and risk shall be borne by Company instead of Government. In the way to get the research objectives in finding out key factors potential cause of failure the gross split implementation at COMPANY and it’s strategy to avoid the failure, author performed the research by qualitative method referred to Creswell research methodology through individual interview of 10 experts in oil & gas industry. The scope of the paper is study literature, observation, individual interview, data analysis, finding and discussion, recommendation, and implementation plan. The research found out that key factor of potential failures the gross split implementation is the cost efficiency, which is driven by inefficiency activities, unmanaged risks, and unmanaged cash flow. If Company could not reach certain amount cost efficiency that equivalent to expenditure ≤ 48% of total gross revenue, then definitely it is going to fail. Research analysis said that cost efficiency could be achieved when company succeed reducing the OPEX and CAPEX by performing strategy such as fit-for-purpose engineering design, expanded procurement strategy, renegotiate existing contracts value, long term contracting strategies, very clear contracts scope, prioritize the work program, and the synergy of stakeholders. By doing the mentioned strategies, company has obtained cost efficiency and generated positive cash flow for 1st year of gross split implementation. This is an early indication that the implementation of the gross split scheme could more likely be sustainable in this COMPANY.