• ISSN: 2010-023X (Print)
    • Abbreviated Title: Int. J. Trade, Economics and Financ.
    • Frequency: Bimonthly
    • DOI: 10.18178/IJTEF
    • Editor-in-Chief: Prof.Tung-Zong (Donald) Chang
    • Executive Editor: Ms. Cherry L. Chen
    • Abstracting/ Indexing:  ProQuest, Crossref, Electronic Journals Library , EBSCO, and Ulrich's Periodicals Directory
    • E-mail: ijtef@ejournal.net
IJTEF 2019 Vol.10(3): 62-66 ISSN: 2010-023X
DOI: 10.18178/ijtef.2019.10.3.639

New Orientation of Oil and Gas Contracts and Fiscal Terms in Indonesia

Jiexin Yi, Kai Wang, Yun Peng, Yuwen Chang, and Kun Tan
Abstract—Indonesia is the first country to use Production Sharing Contracts. To make the contract more efficient, the government adjusts the contract year by year. MEMR Regulation 8/2017 enacted in January 2017 changed the terms for all new upstream licence contracts from Standard PSCs to Gross Split PSCs. The government’s primary aim is to improve efficiency and reduce the administrative burden on the upstream sector by removing cost recovery. This paper aims to present the transition of the fiscal terms and the strategy of the oil company under the new fiscal terms. The gross split PSC model and the standard PSC model are put forward. Compared with these two models, different cost result in opposite conclusion. Under the low cost assumption, the contractor net cash flow of the gross split PSC is higher than the standard PSC. However, if the contractor takes the high cost, the contractor net cash flow of the gross split PSC is lower than the standard PSC. The low cost strategy is necessary for oil company to keep the profit based on the new PSCs.

Index Terms—Standard PSCs, gross split PSCs, economic evaluation.

Jiexin Yi, Kai Wang, Yun Peng, and Yuwen Chang are with Department of Overseas Strategy & Development Planning Research, Research Institute of Petroleum Exploration & Development, China (e-mail: yijiexin09@petrochina.com.cn, wangkai722@petrochina.com.cn, pylxy@petrochina.com.cn, chyw@petrochina.com.cn).
Kun Tan is with Beijing Richfit Information Technology CO., LTD., China(e-mail: Tankun1@cnpc.com.cn).

[PDF]

Cite: Jiexin Yi, Kai Wang, Yun Peng, Yuwen Chang, and Kun Tan, "New Orientation of Oil and Gas Contracts and Fiscal Terms in Indonesia," International Journal of Trade, Economics and Finance vol.10, no.3, pp. 62-66, 2019.

Copyright © 2008-2019. International Journal of Trade, Economics and Finance. All rights reserved.
E-mail: ijtef@ejournal.net