Economic Feasibility Study of Onshore Exploration Oil Field Development using Gross Split Contract

Abstract

The condition of the oil and gas world economy is not good and the cost recovery is too large and the results obtained are not comparable to those obtained by the contractor. Thus, the change in the new contract system with the addition of split rules for contractors considers in managing the oil and gas fields. To restore the situation and restore the spirit of the contractor to continue investing in Indonesia, the Indonesian government provides contractors with incentives and other alternatives to change the existing PSC Contract with the Gross Split PSC based on the Minister of Energy and Mineral Resources Regulation No. 52 of 2017. Field X is one of the onshore Exploration fields in the South Sumatra Basin. The field is a commercial field that has potential oil reserves to be managed. To conduct field X development, it is necessary to conduct an economic study of field X development using a Gross Split contract to determine the feasibility level. Based on calculations using the Gross Split Contract field development X has a contractor NPV value of $ M 192, 63, Government NPV = 415, 235 and Contractor IRR = 41.04%, Government Take = 72.3% and Contractor Take = 27.7%. Based on this, the Government and Contractors will benefit from using the Gross Split PSC Contract because it is economical to develop.