JAKARTA: Indonesia plans to change future production-sharing contracts (PSCs) in its upstream oil and gas sector so that contractors shoulder the cost of exploration and production, rather than be reimbursed by the government.
Energy Minister Ignasius Jonan said on Dec. 19 that the government plans to issue a new regulation in January so that such costs would be reflected by a more flexible split in revenue from production.
Such a system, instead of the existing cost-recovery system, would be fairer and more efficient, and likely to increase proven reserves, he said.Big global resource firms such as Chevron, ExxonMobil and Total operate in Indonesia, but the country has struggled to attract fresh investment and to develop new fields.
Indonesia’s chamber of commerce said it was waiting for more clarity on the plans and the Indonesian Petroleum Association said it was still in discussions with the government.
