IPA Indonesian Petroleum Association : Government Issues the Gross Split Regulations

[JAKARTA] The Government of Indonesia through the Ministry of Energy and Mineral Resources (EMR) has formally issued the new regulations regarding the Gross Split Scheme. This new regulation set out in the Minister of Energy and Mineral Resources Regulation No. 8 Year 2017 concerning the Gross Split Production Sharing Contract is going to be firstly applied to the Offshore North West Java (ONWJ) working area which is managed by PT Pertamina Hulu Energi.

This Gross Split Contract is a production sharing contract in the upstream oil and gas industry which is based on the principle of the gross production with no cost recovery mechanism. This is determined by the mechanism for the results of the initial calculation (base split) that can be adjusted based on variable components. The percentage for the PSC in each working area can be different due to the specific characteristics of the respective working areas.

The base split between the Government and the Contractor is 57:43 for oil and 52:48 for gas. It does not include the payment of Income Tax (VAT) for the contractor.

Detailed provisions regarding the contract for gross result of this split can be seen here. (PS)