Valuation of Production Sharing Contract Cost Recovery Vs Gross Split in Earth Oil and Gas Cooperation Contracts in Indonesia and The Aspect of Public Service

Abstract

Indonesia became an oil importer for the first time in 2003 and will face an excess demand for natural gas compared to supply in 2019. The reason for the decline in oil and gas supply is a lack of exploration. The implementation of oil and natural gas (oil and gas) business in Indonesia is carried out starting through a cooperation contract between the Government through SKK Migas and the contractor’s cooperation contract (KKKS) under Law Number 22 Year 2001 concerning Oil and Natural Gas. The government’s decision to change the Production Sharing Contract (PSC) Cost Recovery into PSC Gross Split in the oil and gas cooperation contract scheme to increase the efficiency and effectiveness of production split between the contractor and the government carried out by SKK Migas as stated in the Regulation of the Minister of Energy and Mineral Resources (ESDM) No. 8/2017 amended by ESDM Minister Regulation No. 52/2018 concerning PSC Gross Split has received a lot of criticism from experts and contractors, even large foreign investors still refrain from wanting to sign the new PSC Gross Split. The aim of the research is to evaluate how the implementation of PSC Cost Recovery is compared with the implementation of PSC Gross Split in the oil and gas cooperation contract in Indonesia, and how the aspects of public services are. The research method used in this research is descriptive method with the application of comparative analysis. While the research approach used is a qualitative approach. Data collection method uses interview, observation and documentation methods. The author concludes, that the government’s decision to use PSC Gross Split is considered more profitable for the government than PSC Cost Recovery in the PSC scheme. It is recommended that the government make a major breakthrough as a major step to promote investment through improving the process of bureaucratic improvement, improving regulation, transparency and eliminating uncertainties in implementing PSC Gross Split, as well as providing various fiscal and non-fiscal incentives, improving public services that are disrupted by lack of transparency from the government, in this case SKK Migas concerning PSC Gross Split, which is caused by uncertainties in the 10 split variables as stipulated in ESDM Minister Regulation No. 08/2017.