Bahlil: The New Gross Split Scheme Stimulates Upstream Oil And Gas Investment

ANTARA/HO-PT PLN (Persero)/aa

Bahlil: The New Gross Split Scheme Stimulates Upstream Oil And Gas Investment

Tuesday, 31 Dec 2024

The Minister of Energy and Mineral Resources, Bahlil Lahadalia, stated that the implementation of a new gross split contract scheme for oil and gas cooperation will significantly enhance investment in the upstream oil and gas sector.

He explained that this new profit-sharing scheme aims to provide more attractive incentives for investors while also accelerating exploration and production activities in the oil and gas industry.

"This new gross split scheme is more competitive and designed to attract global investor interest. It is expected to expedite the increase in domestic oil and gas production capacity," Bahlil remarkedin a statement in Jakarta on Sunday.

The signing of the cooperation contract for the Central Andaman oil and gas working area marks the first instance of utilizing the new gross split scheme.

The contractor for the Central Andaman working area is a consortium comprising Harbour Energy Central Andaman Ltd and Mubadala Energy (Central Andaman) Rsc Ltd, with Harbour Energy serving as the operator.

The consortium has made a signature bonus payment of $300,000 and provided a performance guarantee of $1.5 million.

The Central Andaman contract represents a new chapter for investment in the oil and gas sector, as it is the first contract under the new gross split scheme in accordance with the Minister of Energy and Mineral Resources Regulation No. 13 of 2024 regarding Gross Split Profit Sharing Contracts.

This regulation replaces the previous Ministerial Regulation No. 8 of 2017 on Gross Split Profit Sharing Contracts.

Additionally, the Ministerial Decree No. 230.K/MG.01.MEM.M/2024 has been established to provide guidelines for the implementation and components of the Gross Split Profit Sharing Contract.

These regulatory updates aim to maintain a balance between the interests of contractors and the government.

A key aspect of the new regulations is the assurance of profit-sharing for contractors, which can reach between 75% and 95%.

In the previous gross split contracts, the profit-sharing for contractors was highly variable, sometimes being very low or even zero under certain conditions.