The Effect of Cost Recovery Mechanism in Production Sharing Contract (PSC) in Oil and Gas Industry in Indonesia
- DOI
- 10.2991/iceml-18.2018.55How to use a DOI?
- Keywords
- cost recovery, Production Sharing Contract (PSC), oil and gas, Indonesia
- Abstract
This paper aims to explain the normative rules relating to cost recovery as a basis for profit sharing between the government and the contractors in oil and gas agreements, and the implementation of those agreements. As the exploration and exploitation of oil and gas is a strategic industry for Indonesia, wherein oil and gas industry contributes 30% of the Indonesian state budget. In the management of national oil and gas industry, foreign investors are often involved with Production Sharing Contract. This Production Sharing Contract between the government and investors usually done after cost recovery reduction was made. With a normative juridical and conceptual approach, show there is existence of inconsistency in the implementation of cost recovery in Production Sharing Contract (PSC) of oil and gas procurement, particularly regarding the components that should exist in cost recovery contract of oil and gas cooperation in Indonesia. The amount of cost recovery value will greatly affect the amount for the production of oil and gas. Although it has been regulated in government regulation number 79 Year 2010 on operating cost of re-refundable and tax revenue in the field of oil and gas business, which states that there are 3 components of cost recovery: capital cost, non-capital cost, and depreciation, however there are still many disobediences to the implementation of cost recovery in the field.
- Copyright
- © 2018, the Authors. Published by Atlantis Press.
- Open Access
- This is an open access article distributed under the CC BY-NC license (http://creativecommons.org/licenses/by-nc/4.0/).
Cite this article
TY - CONF AU - Patricia Audrey Ruslijanto AU - Ms Ikaningtyas AU - Rika Kurniaty PY - 2018/09 DA - 2018/09 TI - The Effect of Cost Recovery Mechanism in Production Sharing Contract (PSC) in Oil and Gas Industry in Indonesia BT - Proceedings of the 2018 International Conference on Energy and Mining Law (ICEML 2018) PB - Atlantis Press SP - 254 EP - 259 SN - 2352-5428 UR - https://doi.org/10.2991/iceml-18.2018.55 DO - 10.2991/iceml-18.2018.55 ID - Ruslijanto2018/09 ER -