The government, through the Ministry of Energy and Mineral Resources, continues to strive to improve the oil and gas investment climate in Indonesia. Some of them are, such as preparing incentives for contractors for existing oil and gas contracts and new contracts resulting from auctions. Minister of Energy and Mineral Resources Arifin Tasrif said that for existing contracts the government has provided an aggressive split. Especially for KKKS that have a cost recovery cooperation contract. One of the KKKS that received aggressive split approval was PT Pertamina Hulu Mahakam. "Based on government regulation Number 27 of 2017, this aggressive split has been given to Pertamina Hulu Mahakam," he said at the IPA Convex 2021 event, Wednesday (1/9).
For information, Government Regulation (PP) No. 27 of 2017 regulates Amendments to Government Regulation No. 79 of 2010 concerning Recoverable Operating Costs and the Treatment of Income Tax in the Upstream Oil and Gas Business Sector.
Meanwhile, for new contracts, the convenience provided is the flexibility to choose the type of oil and gas contract, both gross split and cost recovery. Then more aggressive profit sharing, no minimum amount of signature bonus, full DMO price for oil, and reduced first tranche petroleum (FTP). "However, we understand the importance of developing oil and gas reserves as soon as possible because in 30 years the energy transition will arrive and fossil fuels will significantly phase out," he said. Head of SKK Migas Dwi Soetjipto said that the provision of upstream oil and gas incentives to several work areas that had been carried out since 2020 had shown positive results.
Until August 2021, the implementation of upstream oil and gas incentives encourages investors to immediately carry out the process of developing oil and gas fields and updating reserves through the approval of POD OPL and OPLL. So this provides additional oil and gas reserves of 465.5 million barrels of oil equivalent (mmboe) and additional state revenues of at least US$ 2.9 billion or around Rp 41 trillion. Upstream oil and gas incentives also boosted the realization of investment in drilling and production facilities by US$ 3.5 billion or around Rp 50 trillion.
The investment includes drilling 88 development wells, 15 injection wells, 32 reactivation wells, 1 step out well and construction and installation of production facilities. Meanwhile, the benefits received by the Cooperation Contract Contractors (KKKS) are an increase in revenue of US$ 1.5 billion or around Rp. 21.75 trillion.
“Incentives to increase investment competitiveness and Indonesia's upstream oil and gas investment climate are becoming more attractive. Incentives also maintain oil and gas production in the coming years because the existence of incentives also increases oil and gas reserves," he said.
In addition, incentives also have a positive impact because they increase state revenues of at least Rp. 41 trillion, and are able to become a positive catalyst for the upstream industry in the midst of the Covid-19 pandemic that affects upstream oil and gas operational performance. With these positive facts, SKK Migas together with the Ministry of Finance and the Ministry of Energy and Mineral Resources continue to review other incentives that can be given to encourage better performance of the upstream oil and gas industry in the future.
