ASIATODAY.ID, JAKARTA – Oil and gas investment in Indonesia in the future will be increasingly enthusiastic, especially in the natural gas sector as part of the energy transition.
This is because the Ministry of Energy and Mineral Resources has perfected its exploration and exploitation incentive policies since 2021. Apart from that, there are other supporting regulatory policies that are being finalized.
“The last giant oil discovery in the Cepu Block was in early 2000. However, for natural gas there have been giant discoveries in the last 2 years, namely in the South Andaman Block, Andaman II Block and North Ganal Block. The Ministry of Energy and Mineral Resources has made improvements to upstream policies and incentives oil and gas to make exploration more attractive. Apart from that, new policies are also being prepared,” said Director of Upstream Oil and Gas Business Development Ariana Soemanto in Jakarta, Sunday, June 9 2024.
There have been at least three major policies that have made oil and gas investment activities more attractive in the last 3 years.
First, the policy of improving auction provisions and contracts for oil and gas blocks. This includes, among other things, contractor splits that can reach 50%, minimum signature bonuses, direct bidding auctions for oil and gas blocks without joint studies, cheaper bank guarantees, and contract types that can be gross split or cost recovery.
“Proof that this improvement policy has been successful is that 21 new oil and gas blocks have been obtained since this improvement was carried out in 2021. The number of new blocks has increased compared to the period before the policy was implemented. Currently, the Ministry of Energy and Mineral Resources has savings of more than 50 oil blocks and gas which is being reviewed for auction in the next few years,” said Ariana.
Second, the exploration privilege policy. Contractors can move exploration activity commitments to open areas outside the blocks being worked on.
“Apart from that, the exploration period is extended to 10 years, and the additional exploration time is more than 10 years. If this policy does not exist, then the North Ganal gas discovery may not occur,” explained Ariana.
Third, the upstream oil and gas incentive policy Decree of the Minister of Energy and Mineral Resources Number 199 of 2021. This policy is to improve the economics of contractors in the middle of the road, through improving contractor splits, investment credits, accelerated depreciation calculations and improving parameters that affect other economics.
The policy/incentive that is being finalized is the New Gross Split Production Sharing Contract Policy through a Minister of Energy and Mineral Resources Regulation. The new policy is an improvement that includes simplifying contract parameters from 13 variables to 5 variables to make them more effective and ensure a more attractive split amount. Apart from that, there is also an additional split for non-conventional oil and gas (MNK), this is important as a stimulus for MNK to be more enthusiastic.
Other policies that are still under discussion are the Revised Government Regulation Number 27/2017 and Government Regulation Number 53/2017 relating to tax treatment of upstream oil and gas activities. (AT Network)
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