SKK Migas to Boost Production through No Cure No Pay Scheme

The Upstream Oil and Gas Regulatory Task Force (SKK Migas) plans to use a no cure no pay scheme to increase oil and gas production this year. The deputy head of SKK Migas, Fatar Yani Abdurrahman, revealed that the method could expectedly increase oil production by up to 1,000 barrels per day in 2020. Therefore, SKK Migas had facilitated meetings between oil and gas contractors (KKKS) and 17 oil and gas supporting industries. “The implementation of production enhancement technology with a no cure no pay or performance-based scheme is one of SKK Migas’ breakthroughs to boost oil and gas production,” he explained in a written statement on Tuesday (9/1).

According to SKK Migas’ deputy of operations, Julius Wiratno, the no cure no pay scheme will not harm the contractors or oil and gas supporting industries. They will not lose anything if the technology implementation fails since they do not have to pay anything. “So, the scheme will be suitable for contractors or technology providers and become a new business model in Indonesia’s upstream oil and gas industry in the future,” he assured.

Nevertheless, the implementation of the no cure no pay scheme still has to follow the rules. The acting deputy for procurement control of SKK Migas, Sulistya Hastuti Wahyu, stated that the mechanism for goods and services procurement to boost production must comply with existing regulations. “PTK-007 revision 4 allows direct appointment in using proven technology. The implementation of the rules must be clearly stated in the contract, including the payment scheme, to prevent disputes in the future,” Sulistya stated.