The government have decided to lower the gas price for national industries to US$ 6 per million british thermal unit (MMBTU) starting on April 1st, 2020 and have stated that a lower gas price is required to strengthen the competitiveness of domestic industries and ultimately to boost overall economic growth. The government has also promised that the policy will not affect the oil and gas contractors' share as the Government will cut their own share.
The discovery of 2 trillion cubic feet of recoverable gas resources in the Kali Berau Deep Field in South Sumatera in early 2019 marked a new era of oil and gas exploration in Indonesia. Prior to it, it was almost two decades since the last significant discovery in Indonesia which was the Banyu Urip Field in Cepu Block by ExxonMobil Indonesia. The discovery was also among the ten largest finds worldwide in the period of 2018-2019. The discovery sparks real hope for Indonesia.
One of the key considerations for an oil and gas company before making an investment is the type of contract that will be used in the country concerned. In order to increase investment in the upstream sector, Indonesia decided to use the Gross Split scheme as the new type of production sharing contract (PSC) in 2017. Before the PSC Gross Split, Indonesia had various types of contracts but mostly in the last fifty years is PSC Cost Recovery.