Indonesia’s PSC has been amended three times from its first establishment. As shown in table 2.1 the latest PSC is the third generation which established in 1988. The table shows that the latest PSC generation introduces First Tranche Petroleum (FTP) as the new feature, which also affects the level of cost recovery ceiling. Moreover, government also imposes a new Domestic Market Obligation (DMO) price after 60 months of production. However, the level of profit oil or gas split, which also called Equity to Be Split (ETBS), between government and contractor remains the same with the second PSC generation.
Table 2.1 Summary of Indonesia’s PSCs Generation Source: Lubiantara (2012)
Figure 2.4 provides the flow diagram of Indonesia’s PSC calculation. It …show more content…
However, contractor take needs to be reduced for DMO portion first, before it finally provides the final take for contractor. On the other hand, government pays the DMO portion in a certain fee. It is also worth noting that all contractor’s share, whether in FTP and ETBS, is tax deductible. Therefore, tax revenues along with DMO and FTP are additional factors to increase government …show more content…
Profit Oil: Profit oil is a crucial factor in PSC system. It is an instrument for the contractors to grab their take. It is worth noting that there are two types of oil in PSC, which is cost oil and profit oil. Cost oil is part of produced oil used by contractors to recover the costs occur in production process (Schlumberger 2015). Furthermore, Mazeel (2010) mentions that profit oil is the revenues remained after royalty or FTP and cost recovery. It is also worth noting that Indonesia’s PSCis known for its 85%/15% split in government and contractor take. According to Johnston (1994), it is famous because the profit split does not change with costs
Table 2.1 Summary of Indonesia’s PSCs Generation Source: Lubiantara (2012)
Figure 2.4 provides the flow diagram of Indonesia’s PSC calculation. It …show more content…
However, contractor take needs to be reduced for DMO portion first, before it finally provides the final take for contractor. On the other hand, government pays the DMO portion in a certain fee. It is also worth noting that all contractor’s share, whether in FTP and ETBS, is tax deductible. Therefore, tax revenues along with DMO and FTP are additional factors to increase government …show more content…
Profit Oil: Profit oil is a crucial factor in PSC system. It is an instrument for the contractors to grab their take. It is worth noting that there are two types of oil in PSC, which is cost oil and profit oil. Cost oil is part of produced oil used by contractors to recover the costs occur in production process (Schlumberger 2015). Furthermore, Mazeel (2010) mentions that profit oil is the revenues remained after royalty or FTP and cost recovery. It is also worth noting that Indonesia’s PSCis known for its 85%/15% split in government and contractor take. According to Johnston (1994), it is famous because the profit split does not change with costs