PROPOSED PRODUCTION SHARING CONTRACT SCHEME TO IMPROVE OIL AND GAS INVESTMENT IN INDONESIA

• Main Author: Yulfitraeni
• Format: Theses
• Language: Indonesia
• Online Access: https://digilib.itb.ac.id/gdl/view/52081
• Institution: Institut Teknologi Bandung

The decline in oil and gas reserves and production cannot be separated from the strategy of oil and gas management by the state, based on the 2018 Fraser Institute Global Petroleum Survey, placing Indonesia in the 71st rank of 80 countries with the least attractive jurisdiction for investment. The oil and gas industry with high costs and risks requires legal certainty to ensure the investment climate runs smoothly. The issuance of regulations regarding the gross split PSC (Production Sharing Contract) oil and gas contract system as a substitute for the PSC cost recovery production sharing contract scheme has not answered the problem of oil and gas investment in Indonesia. This is marked by the issuance of Regulation of the Minister of Energy and Mineral Resources (Permen ESDM) No 12 of 2020 concerning the third amendment to the Minister of Energy and Mineral Resources No.8 of 2017, where this regulation reintroduces the PSC cost recovery contract scheme as an alternative to the Government and Contractor's profit sharing contract scheme. Generally the upstream oil and gas contract scheme deals with the production sharing contract scheme and the service contract scheme (Lubiantara, 2012). This study takes the contract scheme of all countries that represents the upstream oil and gas contract scheme to then analyze the Government and Contractors revenue sharing. Based on the evaluation of oil and gas contracts in various countries and analysis of schemes in Indonesia, a new oil and gas contract scheme scheme can improve the investment climate in Indonesia. The proposed new oil and gas contract scheme with the concept of protecting the Government when oil prices soar and protecting contractors by increasing project profits that can provide economic value. The scheme scheme can protect the Government by knowing the recovery costs of 40% to a maximum of 80% based on the ratio of renenue over cost (ROC). The scheme of increasing the Contractor's IRR increases when the oil price increases, but still provides benefits to the Contractor with projects that can provide economic value