The government is currently making adjustments to more flexible upstream oil and gas (oil and gas) investment regulations. This initiative is expected to provide easy benefits for Cooperation Contract Contractors (KKKS) in running oil and gas businesses in Indonesia. They were even offered a new gross split scheme which was simpler and more feasible.

This regulation is contained in the Minister of Energy and Mineral Resources (MEMR) Regulation Number 13 of 2020 and the Decree of the Minister of Energy and Mineral Resources Number 230.K/MG.01.MEM/2024. The essence of improving the gross split profit sharing scheme is to provide guaranteed profit sharing of around 75-95 percent for contractors, make Non-Conventional Oil and Gas Work Areas (WK) more attractive, simplify parameters, and provide more flexible (agile) options to contractors.

"This simplification is not only to encourage a new gross split, but also the government provides flexibility for contractors to choose the type of contract according to the contractor's convenience. Please allow contractors who want to move to Cost Recovery from the previous Gross Split or vice versa," said the Director of Upstream Oil and Gas Development. Ministry of Energy and Mineral Resources Ariana Soemanto in Jakarta, Saturday (5/10).

The implementation of this policy, continued Ariana, applies to contracts signed after Ministerial Regulation Number 13 of 2024 regarding Gross Split Production Sharing Contracts. Meanwhile, existing oil and gas contractors whose contracts were signed before the Ministerial Regulation was issued can switch to a new gross split contract with several notes.

First, the old gross split scheme contracts for MNK, including coal methane gas and shale oil/gas, can switch to the new gross split scheme. "This is like the MNK Coal Methane Gas project in Tanjung Enim. It will soon switch to a new gross split so that it can run because the economics are improving," explained Ariana.

Second, the cost recovery scheme contract can switch to a new gross split scheme, as long as it is still in the exploration stage and has not received approval for the first plan of development (POD-I) from the Government. "As for old or existing gross split scheme contracts that are already in the production stage, they cannot be changed to the new gross split scheme, but can be changed to cost recovery scheme contracts," said Ariana.

To date, there are at least five contractors/blocks who have expressed interest in using the new gross split scheme, in accordance with the Regulations and Decree of the Minister of Energy and Mineral Resources. "Who and which blocks, we should wait for the formalities later. Of course, it's up to the contractor to choose which contract scheme suits each contractor's risk profile. What's important is that we improve the investment climate to make it more attractive, to encourage the discovery of oil and gas reserves and production in the future ," said Ariana.

As is known, the Ministry of Energy and Mineral Resources has just issued Minister of Energy and Mineral Resources Regulation Number 13 of 2024 concerning Gross Split Production Sharing Contracts which was signed on August 12 2026. This Ministerial Regulation replaces Minister of Energy and Mineral Resources Regulation Number 8 of 2017 concerning Gross Split Production Sharing Contracts which has been adjusted several times.

Apart from that, Decree of the Minister of Energy and Mineral Resources has also been stipulated Number 230.K/MG.01.MEM.M/2024 concerning Implementation Guidelines and Components of Gross Split Production Sharing Contracts. "The government will always try to fulfill stakeholder input while maintaining the interests of the state," concluded Ariana. (NA)

(SOURCE)