Abstract

Referring to the Ministry of Energy and Mineral Resources regulation in 2017 number 8, the government intends to encourage contractor in Indonesia to conduct exploration and exploitation activity to be more effective and efficient in way of implementing gross split PSC in Indonesia, especially for expiry block. In 2018-2028, there will be 23 expired blocks. Some of those blocks have been reaching the marginal category and they are needed to be evaluated with current regulation of fiscal regime. In marginal block, abandonment and site restoration (ASR) cost is being issue for economic feasibility.

To evaluate impact of ASR mechanism in Indonesia's gross split PSC for marginal block, a model block is evaluated. The model has high cost per barrel (USD39/boe) and ASR cost is 34% of total cost. Economic evaluation for this marginal block with ASR issue is assessed using NPV as feasibility indicator. The evaluation result using Indonesia's gross split PSC is not favorable for contractor. This paper presents modification of ASR funding mechanism in Indonesia's gross split PSC.

Modification of funding mechanism consists of scenario with ASR cost is fully taken from government take, ASR cost is taken from government take when the cash flow of contractor is negative, and ASR cost is shared between government and contractor based on total split This modification gives positive result for contractor side.

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