Publications

PSC contractor may need at least 20 years to recoup its investment therefore attracting upstream investment is key to realizing Indonesia’s long-term goal of raising oil and gas output in 2030. Delays in a project's completion can turn a profitable project into one that loses money. To reduce field production time, a new PSC contractor can produce more faster by utilizing excess capacity in existing production facilities operated by another contractor using Facility Sharing Agreement mechanism. The Government of Indonesia allows excess capacity in an existing PSC contractor to be used by another PSC contractors and has issued a regulation stating that the parties involved are tax-exempt under the FSA mechanism. This study employs a qualitative approach-a case study- as a research method and extent the research by providing hypothetical calculations to describe in detail the monetary benefits of FSA. This study focuses on two recent deep sea field developments in the Kutei Basin, Kalimantan Region, and Makassar Strait. In accordance with the findings of the study, FSA implementation is mutually beneficial for all parties involved, and the implementation of it can drastically increasing a field economic. Recent trend in Indonesia where most of the basins located in Eastern Indonesia, the possibility to tie in to existing mature facilities can accelerate the time to first oil and gas and eliminate the cost to build a production facility, which is the majority of the development stage's expenditures . For the facility operator, FSA can reduce the amount of fixed costs to third parties consisting of operating and maintenance, whereas Government of Indonesia benefited from on-time completion of projects contributes to the achievement of production targets and tends to increase the multiplier effect on the economy. Implementation of FSA will drastically increase economic aspect of a working area, which will resulted in better investment climate since new investor will be interested to develop such marginal and remote field. This paper will provide an overall benefit analysis of FSA application for more effective business strategy for SKK Migas, as the upstream oil & gas regulator and the support to sustainable future operational for the upstream oil & gas contractors.