The Indonesian government has introduced more flexible regulations for upstream oil and gas (migas) investments, aiming to ease the process for investors and contractors (KKKS) looking to transition between investment contracts. The Director of Upstream Oil and Gas Development at the Ministry of Energy and Mineral Resources (ESDM), Ariana Soemanto, announced a new regulation that revises the revenue-sharing model for oil and gas management contracts, specifically gross split contracts. The new regulation, ESDM Ministerial Regulation No. 13/2024, replaces the previous Regulation No. 8/2017. This updated rule offers contractors a more predictable revenue share, ranging from 75% to 95%, a significant improvement from the previous model, where returns could vary greatly, even reaching 0% under certain conditions.
The new policy allows contractors to choose between the gross split and cost recovery schemes depending on their comfort level. This flexibility benefits those with contracts signed before the implementation of Regulation No. 13/2024, who can now switch to the new gross split model under specific terms. The policy is particularly relevant for Non-Conventional Oil and Gas (MNK) projects, like the Tanjung Enim Coal Bed Methane Gas project, which is expected to transition to the new gross split scheme. Ariana also highlighted that at least five contractors have expressed interest in adopting the new contract structure, and further details are expected soon. The simplified gross split structure now includes only five components for determining revenue, such as reserves, field location, infrastructure availability, and oil and gas prices, down from the previous 13 components.
