Indonesia to Issue New Gross Split Scheme to Boost Contractor’ Spirit

The Indonesian Energy and Mineral Resources Ministry is revising regulations regarding gross split production-sharing contracts. Tutuka Ariadji, the Energy and Mineral Resources Ministry's Director General of Oil and Gas, stated that several oil and gas companies are seeking a transition from gross split to cost recovery contracts. "We hope to release the new Ministerial Regulation on gross split, possibly by the end of this month or early next month," he said on Jan 15.

According to Tutuka, the purpose of the new Ministerial Regulation is to simplify the provisions related to gross split contracts. Once the new regulations are in place, oil and gas companies can either continue with gross split production-sharing contracts or switch to cost recovery contracts. Tutuka acknowledged the necessity of contract transitions in certain oil and gas fields. "In some fields, using gross split is not always economical. Even with a 100 percent split, it can still be negative. So, a contract switch may be necessary," he said.