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    AIPN - Lubiantara - 9 March 2017-1 PDF

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    The document summarizes Indonesia's new Gross Split PSC regime, which was the topic of an AIPN Asia Chapter event on March 9th, 2017. The Gross Split PSC uses a variable production split that is determined based on 10 variable components and 2 progressive components related to oil price and cumulative production. The split can adjust the baseline 57% government and 43% contractor split higher or lower depending on the project characteristics and conditions.

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    AIPN - Lubiantara - 9 March 2017-1 PDF

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    erwan
    75 views15 pages
    The document summarizes Indonesia's new Gross Split PSC regime, which was the topic of an AIPN Asia Chapter event on March 9th, 2017. The Gross Split PSC uses a variable production split that is determined based on 10 variable components and 2 progressive components related to oil price and cumulative production. The split can adjust the baseline 57% government and 43% contractor split higher or lower depending on the project characteristics and conditions.

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    The document summarizes Indonesia's new Gross Split PSC regime, which was the topic of an AIPN Asia Chapter event on March 9th, 2017. The Gross Split PSC uses a variable production split that is determined based on 10 variable components and 2 progressive components related to oil price and cumulative production. The split can adjust the baseline 57% government and 43% contractor split higher or lower depending on the project characteristics and conditions.

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    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    75 views15 pages

    AIPN - Lubiantara - 9 March 2017-1 PDF

    Uploaded by

    erwan
    The document summarizes Indonesia's new Gross Split PSC regime, which was the topic of an AIPN Asia Chapter event on March 9th, 2017. The Gross Split PSC uses a variable production split that is determined based on 10 variable components and 2 progressive components related to oil price and cumulative production. The split can adjust the baseline 57% government and 43% contractor split higher or lower depending on the project characteristics and conditions.

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    of 15

    GROSS SPLIT PSC

    AIPN Asia Chapter Event "Indonesia's New Gross Split PSC Regime
    March 9th, 2017

    Benny Lubiantara
    Executive Advisor, SKK MIGAS

    Disclaimer: Some views expressed in this presentation represent personal views, do not necessarily represent the perspectives of the Institution

    SATUAN KERJA KHUSUS


    PELAKSANA KEGIATAN USAHA HULU MINYAK DAN GAS BUMI
    (SKK MIGAS)
    WHY GROSS SPLIT ??

    Slow Approval Process

    Cost Inefficiency

    Cost Recovery Debate/Discussion/Misunderstanding


    Has Become Contra-Productive
    Cartoon: Courtesy Google
    Sumber: Benny Lubiantara, Ekonomi Migas - Tinjauan Aspek Komersial Kontrak Migas, Penerbit Grasindo, 2012
    The Gross Split is a PSC type, not a Concession type
    even though the construction of the flow chart is similar

    GROSS SPLIT PSC


    SPLIT DETERMINATION

    Contractor Split
    Before Tax
    =
    Oil - 57% : 43% (Gov : Contractor)
    Base Split Gas - 52% : 48%
    +/-

    Variable Split
    +/-

    Progressive Split
    VARIABLE AND PROGRESSIVE SPLIT
    No: Variable Split Adjustment
    1 Block Status Plan of Development (POD) (5%) 5%
    2 Field Locations Onshore or Offshore, Water Depth 0 m 0% 16%
    > 1000 m)
    3 Reservoir Depth X <= 2,500m and X > 2,500 m 0% 1%
    4 Infrastructure Well Developed, New Frontier 0% 2%
    5 Reservoir Conditions Conventional or Non-Conventional 0% 16%
    6 CO2 Content X < 5% up to X >= 60% 0% 4%
    7 H2S Content X < 100 ppm up to X >= 500 ppm 0% 1%
    8 API Gravity X < 25 and X > 25 0% 1%
    9 Local Content X < 30% up to X > 70% 0% 4%
    10 Production Phase Primary, Secondary, Tertiary 0% 5%

    No: Progressive Split Adjustment


    1 Oil Price X < 40 $/bbl up to X >= 115 $/bbl (7.5%) 7.5%
    2 Cumulative X < 1 MMBOE, X > 150 MMBOE 0% 5%
    Production
    ILLUSTRATION
    No: Variable Split Adjustment
    1 Block Status POD 1 5%
    2 Field Locations > 100O m 16%
    3 Reservoir Depth X >2,500 m 1%
    4 Infrastructure New Frontier 2%
    5 Reservoir Conditions Conventional 0%
    6 CO2 Content 10% < X < 20% 1%
    7 H2S Content 100 < X <300 ppm 0.5%
    8 API Gravity X > 25 0%
    9 Local Content 50% < X < 70% 3%
    10 Production Phase Primary 0% 28.5%

    No: Progressive Split Adjustment


    1 Oil Price X = 50 $/bbl 5%
    2 Cumulative X = 20 MMBOE 3% 8%
    Production

    Contractor Split Before Tax:


    Oil = 43% + 28.5% + 8% = 79.5% IF Oil Price 70 $/bbl = 74.5%
    Gas = 48% + 28.5% + 8% = 84.5%
    ILLUSTRATION
    No: Variable Split Adjustment
    1 Block Status POD 1 5%
    2 Field Locations Onshore 0%
    3 Reservoir Depth X >2,500 m 1%
    4 Infrastructure Well Developed 0%
    5 Reservoir Conditions Conventional 0%
    6 CO2 Content 10% < X < 20% 1%
    7 H2S Content X < 100 ppm 0%
    8 API Gravity X > 25 0%
    9 Local Content 50% < X < 70% 3%
    10 Production Phase Primary 0% 10%

    No: Progressive Split Adjustment


    1 Oil Price X = 50 $/bbl 5%
    2 Cumulative X = 20 MMBOE 3% 8%
    Production

    Contractor Split Before Tax:


    Oil = 43% + 10% + 8% = 61% IF Oil Price 70 $/bbl = 56%
    Gas = 48% + 10% + 8% = 66%
    GROSS SPLIT PSC
    (Update)

    1. Indonesian PSC have been used since mid-1960s. One size fits all
    model does not exist Gross Split PSC may be seen as a new
    alternative to conventional PSC.

    2. Minister Regulation (Permen ESDM No.8/2017) on Gross Split PSC


    effective : January 16th, 2017

    3. The first Gross Split PSC Contract ---> PHE ONWJ

    4. The successful implementation of the Gross Split PSC requires more


    cost efficient contractor and less complicated government business
    process.

    5. The Devil is in the Detail

    6. Lesson learnt from similar model Indian Revenue Sharing Contract?

    7. At the end, How attractive is the GS Model? Market will tell We


    will know it when we see it.
    Thank You

    11
    10 Variable Components:

    Type of Incentive Additional Contractor Split

    POD I 5%
    Block POD II dst 0%
    1
    Status POFD 0%
    No POD -5%
    Onshore 0.0%
    Offshore (0<h<=20m) 8.0%
    Field Offshore (20<h<=50m) 10.0%
    2 Offshore (50<h<=150m) 12.0%
    Location
    Offshore (150<h<=1000m) 14.0%
    Offshore (>=1000m) 16.0%
    Type of Incentive Additional Contractor Split

    3 Reservoir <= 2500 m 0


    Depth > 2500 m 1%
    4 Supported Well develop 0
    Infrastructure New Frontier 2%
    5 Reservoir Conventional 0
    Type of Incentive
    Condition Additional Contractor Split
    Non Conventional 16%
    <5% 0.0%
    5%=<x<10% 0.5%
    10%=<x<20% 1.0%
    6 CO2 (%)
    20=<x<40% 1.5%
    40%=<x<60% 2.0%
    x>=60% 4.0%
    <100 0.0%
    100=<x<300 0.5%
    7 H2S (ppm)
    300=<x<500 0.75%
    x>=500 1.0%
    Oil Specific API<25 1%
    8
    Gravity (API) API>25 0
    Type of Incentive Additional Contractor Split

    <30% 0%
    30%=<x<50% 2.0%
    9 Local Content
    50%=<x<70% 3.0%
    70%=<x<100% 4.0%
    Primary 0%
    Production
    10 Secondary 3%
    Phase
    Tertiary 5%
    2 ofProgressive
    Type Incentive Components:
    Additional Contractor Split

    <40 7.5%
    40=<x<55 5.0%
    55=<x<70 2.5%
    11 Oil Price 70=<x<85 0.0%
    85=<x<100 -2.5%
    100=<x<115 -5.0%
    >=115 -7.5%
    <1 mmboe 5.0%
    1-10 mmboe 4.0%
    Cumulative 10-20 mmboe 3.0%
    12
    Production 20-50 mmboe 2.0%
    50-150 mmboe 1.0%
    >150 mmboe 0.0%

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