• ISSN: 2301-3567
    • Frequency: Quarterly (2013-2014); Monthly (2015-2017); Quarterly (Since 2018)
    • DOI: 10.18178/JOEBM
    • Editor-in-Chief: Prof. Eunjin Hwang
    • Executive Editor: Ms. Mia Hu
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JOEBM 2018 Vol.6(2): 51-55 ISSN: 2301-3567
DOI: 10.18178/joebm.2018.6.2.549

Indonesia’s New Gross Split PSC: Is It More Superior Than the Previous Standard PSC?

M J Giranza and A Bergmann
Abstract— Indonesia became an oil importer for the first time in 2003 and will face the excess of natural gas demand compared to supply by 2019. The reason of declining supply of oil and gas is the lack of exploration. The low exploration activity in Indonesia was started after the Indonesian Legislation 22/2001 just was launched. In January 2017, Minister of Energy and Mineral Resources issued the Minister Regulation No. 08/2017 to increase the efficiency and effectivity of split production between the government and contractors. This research aims to compare standard PSC and gross split PSC in order to prove whether the new regulation gives more superior fiscal regime for the government and contractor or not. This study assess the economic evaluation of governments and contractor take in rokan block PSC and conduct qualitative comparative for both of fiscal petroleum contracts. The criteria that will be exercised are revenue raising potential, neutrality, risks, adaptability and progressivity, administration, and project sensitivity analysis of contractor take based on the change average cost. In conclusion, gross split PSC is not more superior fiscal regime than standard net PSC. Although the gross split PSC gives the better structure of progressivity and simple administration, the exceed risks for contractors regarding the profitability make the sharing risk is not balance. The best way to attract the investors in the term of gross split PSC is adding the incentive for contractors without changing the oil split in the government regulation which is block basis ringfence policy.

Index Terms— Production sharing contract, Indonesian PSC, gross split PSC, rokan block.

M J Giranza and A Bergmann are with CEPMLP, University of Dundee, Dundee, Scotland, UK (email: m.j.giranza@dundee.ac.uk, E.A.Bergmann@dundee.ac.uk).

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Cite: M J Giranza and A Bergmann, " Indonesia’s New Gross Split PSC: Is It More Superior Than the Previous Standard PSC?; Journal of Economics, Business and Management vol. 6, no.2, pp. 51-55, 2018.

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