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Article 33 of the 1945 Constitution requires that mineral resources be developed in such a way that people will obtain the greatest benefit. The law on oil and gas number 44 of 1960, determined that for this purpose the development must be undertaken by a State-own Enterprise. Since capital and knowhow are essential for development, if necessary the State Enterprise can cooperate with other parties as contractors.Currently Indonesia applies Production Sharing Contract (PSC). The PSC is a type of Petroleum Contract typically entered into by the Host Countrys nominee. This involves a Ministry of Energy and Mineral Resources and Executive Body for Upstream Business of Oil and Gas or BPMIGAS (Badan Pelaksana Kegiatan Usaha Hulu Minyak dan Gas Bumi) and contractors. Because of management being in the hands of the BPMIGAS, work programs and budgets, major contracts as well as Plans of Development has to get the BPMIGAS prior approval. All assets are owned by BPMIGAS upon being placed in service. Contractor's profit is paid based on an agreed split of production with BPMIGAS, after cost recovery.The Cost Recovery allows the contractor to recover its exploration, development and operating expenditures from a portion of the annual production, which cannot exceed an agreed percentage of the total production. If, in any calendar year, the operating costs exceed the agreed percentage, then the un-recovered excess shall be recovered in succeeding years.Apparently, the Cost Recovery is becoming a critical issue. If the production or revenue is relatively high, at some point, there will be a likely for the Contractors to disregard the operating cots effectiveness and efficiency. In turn, the Government of Indonesia share will lessen and the people greatest benefit will not be maximized.This paper re-questions the Cost Recovery effectiveness. It provides an argument that removing the Cost Recovery instrument will support promoting oil and gas investment through partnership, instead.