The government has signed the first New Gross Split scheme in the Central Andaman Oil and Gas Working Area (WK Migas) Contract with two foreign energy companies, making it the first WK Migas in Indonesia to use this scheme.
The signing was carried out by Head of the Upstream Oil and Gas Regulatory Task Force (SKK Migas), and a consortium of Cooperation Contract Contractors (KKKS), namely Harbor Energy Central Andaman Ltd from England and Mubadala Energy (Central Andaman) Rsc Ltd from the United Arab Emirates (UAE).
Dadan Kusdiana, Acting Director General of Oil and Gas at the Ministry of Energy and Mineral Resources (ESDM), said that the Central Andaman WK Contract is a new history for investment in the oil and gas sector.
The contract is a contract with the first New Gross Split scheme in accordance with the provisions of the Minister of Energy and Mineral Resources Regulation No. 13/2024 on Gross Split Production Sharing Contracts.
“This is a new milestone, a new history, because the Central Andaman Block is the first contract with the New Gross Split scheme. The Regulation of the ESDM Minister related to the New Gross Split was signed by the Minister of Energy and Mineral Resources two months ago. Today is proof that the regulation prepared by the Ministry of Energy and Mineral Resources is implementable,” Dadan said on Tuesday, December 3, 2024.
The Central Andaman WK will be operated by Harbour Energy Central Andaman Ltd. The KKKS Consortium has made a signing bonus payment of US$300,000 (Rp4.8 billion) and submitted an implementation guarantee of US$1,500,000.
Currently, the government is trying to make the upstream oil and gas sector attractive to investors. One of the measures taken is by preparing a new gross split scheme profit sharing contract (New GS).
This contract simplifies the contractor’s split component in the contract, which previously included 13 components to only 5 components so that it is more implementable, simple, and the amount of the split is also more attractive to contractors.
“In the New GS, contractors can get a split of up to 75-95 percent. Meanwhile, in the old GS contract, to get decent economics, most contracts had to submit additional splits to the government, an uncertainty for contractors,” Ariana Soemanto, Director of Upstream Oil and Gas Business Development, said on August 23, 2024.
