Publications

Indonesia has adopted a new oil and gas fiscal system called Gross Split PSC (Production Sharing Contract). The objective is to implement a better system for developing oil and gas projects in Indonesia, which will empower the government to secure a higher government take (GT) from the early stages of production and reduce bureaucracy for contractors. This individual project compares the new PSC scheme and the Traditional PSC system using deterministic sensitivity analysis to determine the most optimal fiscal terms under the Gross Split PSC. The discussion includes profitability index, such as the government’s share of gross revenue (GSGR), project’s net present value (NPV) and the internal rate of return (IRR). The work was carried out from both the contractor’s and government’s perspective in an Indonesian Petroleum Association (IPA) simulation gas case study field development in deep offshore. The results of the economic modelling analysis provides that Gross Split PSC will have the same IRR as the Traditional PSC if the project is accelerated for one year, receives a 5% deductible effective tax rate and gets an additional progressive split of cumulative production.