Abstract
This study aims to: 1) analyze empirically and test the effect of cost recovery in the Production Sharing Contract (Oil and Gas Production Sharing). 2) empirically analyze and test the effect of cost recovery in the upstream Oil and Gas Industry on State Revenues. The unit of analysis of this research is the upstream oil and gas industry managed by the Indonesian government with a Production Sharing Contract system with 44 companies or contract operator cooperatives. The population includes those who work as operators of cooperation contract contractors and SKK MIGAS with 62 manager levels, 51 professionals and 18 university researchers. And the researchers also used secondary data in SKK MIGAS in the 1984-20019 period. This research uses a qualitative approach, and the analysis of the data used is descriptive analysis, because the data analysis is done not to accept or reject hypotheses, but in the form of descriptions of observed symptoms, which are not always in the form of numbers or coefficients between variables . However, the emphasis is not on hypothesis testing, but on efforts to answer research questions through formal and argumentative ways. The results of the study indicate that there is a relation between the Cost Recovery component and the terminology in the Production Sharing Contract in the Upstream Oil and Gas Industry in Indonesia . By placing the right cost post on cost recovery will be able to reduce production costs from the Cooperation Contract Contractor (KKKS).
Highlights
Upstream Oil and Gas Industry, managed in the form of Production Sharing Contracts, while the rationale for oil and gas management in Indonesia has been designed for a long time
Production Sharing Contract (PSC), which requires contractors to provide investment, skills and technology to work on oil and gas working areas
When the area is in production, the state and the contractor will share profits after the state revenue is reduced by a number of deduction factors, including a return on operating costs or cost recovery
Summary
Upstream Oil and Gas Industry, managed in the form of Production Sharing Contracts, while the rationale for oil and gas management in Indonesia has been designed for a long time. The idea of the Production Sharing Contract was sparked by Bung Karno, who was inspired by the practices that apply in the management of agriculture in Java, where most farmers (Marhaen) are not owners of rice fields. Farmers get their income from profit sharing (paron), while management is in the hands of their owners. In the Production Sharing Contract (PSC), management is in the hands of the government, the contractor as the operator which has an obligation every time he wants to develop the field he must submit a POD (Plan of Development) or development planning, WP&B (Work Program and Budget) or work program and funding and AFE (Authorization for Expenditure) or expenditure authorization so that expenses can be controlled. Many countries adopted them including oil exporting countries: Indonesia, Egypt, Malaysia, Syria, Oman, Angola, Gabon, Libya, Qatar, China, Algeria and Tunisia
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