Publications

Indonesia's Central Sumatra Basin stands as a bastion of abundant natural oil and gas resources, boasting a well-established petroleum system and a rich history of exploration and exploitation. Despite its years of productive development, the basin continues to hold substantial reserves, offering a promising avenue for securing Indonesia's long-term energy needs.

However, while basins like Central Sumatra often benefit from lower exploration risks and mature infrastructures, they also tend to face less favorable fiscal terms, which can diminish profit shares for Contractors. This is particularly relevant for late-life exploitation blocks within the basin, where opportunities for hydrocarbon extraction persist towards the end of field production. Yet, these opportunities come with economic challenges, potentially hastening production decline faster than cost reductions can offset.

To address this challenge, one potential solution lies in incentivizing Contractors to exceed standard fiscal terms outlined in Production Sharing Contracts (PSCs), thereby bolstering the economic viability of late-life assets. These incentives should not only encourage cost savings through responsible management but also provide avenues to monetize stranded hydrocarbons until the PSC's expiration.

This paper meticulously examines the efforts required by Contractors and the crucial fiscal incentives necessary to maintain a positive cash flow until the end of the PSC. By optimizing the utilization of Indonesia's invaluable oil and gas resources in the Central Sumatra Basin, this research aims to offer insights into enhancing economic outcomes and responsibly managing late-stage oil and gas fields.