Indonesia changes production-sharing terms

Jan. 20, 2017
The government of Indonesia has implemented new production-sharing terms for oil and natural gas.

The government of Indonesia has implemented new production-sharing terms for oil and natural gas.

The Ministry of Energy and Mineral Resources issued regulations for the new “gross-split contract,” which is based on gross production with no mechanism for cost recovery.

Shares are adjusted for new contracts from government-contractor “base splits” starting at 57-43 for oil and 52-48 for gas.

The government-contractor splits under the former contract, which provided for cost recovery, were 85-15 for oil and 70-30 for gas.

PT Pertamina Hulu Energi signed the first contract under the new scheme, covering an extension of the Offshore North West Java (ONWJ) block.

The ONWJ government-contractor splits are 47.5-52.5 for oil and 37.5-62.5 for gas.

At the end of last year, the block produced 35,800 b/d of oil and 155 MMscfd of gas.