Friday, October 21, 2016
ESDM Finalizes Proposed Revision of Profit-Sharing Counter
63 LNG Cargo Uncontracted
Thursday, October 20, 2016
PGN Owns and Operates 78% of Gas Pipes in Indonesia
ESDM looks at the budget for the new oil and gas project
Wednesday, October 19, 2016
Hundreds of Oil and Gas Contracts Received Special Treatment
National Natural Gas Transmission Pipeline Achieved only 20% of the Target
Investor Daily, Page-9, Wednesday, Oct 19, 2016
The Bojonegoro district government plans to clarify about the oil production fund
Cost Recovery will be cut by 30%
To attract investment in the oil and gas sector, the government will reduce cost recovery by up to 30%. The plan to reduce cost recovery is being calculated by the Minister of Energy and Mineral Resources (ESDM) Ignasius Jonan.
Coordinating Minister for Maritime Affairs Luhut Binsar Pandjaitan said cost recovery could be reduced because world oil prices were weakening. The target of reducing cost recovery this year is the US $ 10.4 billion and next year is lower than that. I am optimistic that Ignasius Jonan and Arcandra Tahar (Deputy Minister of Energy and Mineral Resources/ESDM) can make it better, "said Luhut.
Luhut said cost recovery was reduced by 30% for projects whose contracts have not yet started. The reduction in cost recovery is only about 5% for projects that have signed contracts. He hopes that the cost recovery cut will attract investors to invest in the oil and gas sector.
"Now, foreign investors come with technology and competence. We have to fight with competence in our field, we want to reduce cost recovery.
The government is targeting the revision of Government Regulation Number 79/2010 concerning the cost recovery of oil and gas investment to be completed soon. Discussions on the revision of Government Regulation number 79/2010 between the government and oil and gas players such as the Indonesian Petroleum Association (IPA) have found an agreement.
Secretary-General of the Ministry of Energy and Mineral Resources, Teguh Pamudji, added that the plan to cut cost recovery has been agreed with Commission VII of the House of Representatives (DPR) that the cost recovery in 2017 should be below the US $ 10 billion. He said the plan was indeed being studied. However, he could not reveal further about the study. ESDM Deputy Minister Arcandra Tahar explained that there is still room for cutting cost recovery.
He said, for the signed oil and gas contract, there will be discussions with the contractor. From this discussion, we will find out what parts can be suppressed. He did not want to mention that the cost recovery could be cut by up to 5%.
"The team will see again which parts can be reduced,".
Arcandra revealed, for oil and gas projects that have not yet been signed, such as the Masela Block and East Natuna, have more room to reduce cost recovery. But again he did not want to reveal what the cut was. Chairman of the Indonesian Employers Association (Apindo) in the EMR sector Sammy Hamzah supports the government's plan to reduce the cost recovery in the oil and gas sector by up to 30%.
He said the reduced cost recovery was able to attract investment interest because the oil and gas contractor's share was better. Sammy said that efforts to reduce cost recovery costs could logically be realized.
This is in line with the low world oil price. This condition causes the cost of supporting services in the oil and gas sector to also decrease. He said that the oil and gas contractor together with the Special Task Force for Upstream Oil and Gas Business Activities (SKK Migas) must sit together in renegotiating existing contracts.
Head of SKK Migas, Amien Sunaryadi, revealed that the high-cost recovery of Cooperation Contract Contractors (KKKS) has been caused by vendor companies who have contracted with KKKS.
"Currently, there are 139 KKKS companies that have contracted with SKK Migas, and I see that the cost recovery is uncontrollable," said Amien.
According to Amien, the incident was caused by each KKKS company using a third party (vendor) in working on oil and gas drilling.
"If you want to drill, it is not the KKKS that will drill, but the KKKS will make a contract with the drilling company. Likewise, if you need pipes, the KKKS will not make the pipes, the KKKS will sign a contract with the pipe supplier. If the KKKS wants to build buildings, facilities, wants to build roads, wants to buy ships, wants anything, it is not the KKKS that builds them. KKKS buy and sign contracts with vendors, ”said Amien.
Amien said, there are thousands of contracts between KKKS and vendors. He admitted that his party had never checked the truth of these contracts.
"The number of vendors is more than 1,500. So there are tens of thousands, maybe hundreds of thousands of contracts between KKKS and vendors. Moreover, up-vendor companies, ".
The former deputy chairman of the Corruption Eradication Commission (KPK) said that each KKKS has so far entered a cost recovery figure based on the amount paid to the vendor. And this amount depends on the contract between the KKKS and the vendor.
"Therefore I can confirm that checking only up to KKKS is useless. If this is not checked properly, then no one can be sure that this contract is efficient. Especially if the contract with the vendor is further spelled out with the possibility that the vendor will contract with the sub-vendor. Then, it could be deeper into sub-vendors with sub-vendors.
Investor Daily, Page-1, Wednesday, Oct 19, 2016
300 Oil and gas contracts Receive Tax Incentives
About 300 oil and gas cooperation contracts will receive tax relief incentives. Secretary-General of the Ministry of Energy and Mineral Resources (ESDM) Teguh Pamudji said the revision of Government Regulation No. 79/2010 concerning Refundable Operating Costs and Income Tax Treatment in the Upstream Oil and Gas Business Sector will guarantee incentives for these 300 contracts.
One of the incentive requirements is that the cooperation contract is signed prior to the enactment of Government Regulation no. 79/2010. With the revision of Government Regulation no. 79, the assumption and discharge concept will be applied, which means that the calculation of the state and contractor's share includes the tax component.
Thus, the contractor is no longer subject to additional taxes. In fact, oil and gas contracts should have been signed after the issuance of Law no. 22/2001 on oil and gas, and Government Regulation no. 79/2010 is still subject to additional tax. For the cooperation contracts signed before the oil and gas law and after the oil and gas law, but before the government regulation was enacted, assume and discharge still applies, ".
He detailed that there were around 130 cooperation contracts signed before the issuance of the Oil and Gas Law, such as Blok-Rokan in Riau. In addition, 170 contracts were signed prior to Government Regulation no. 79/2010 is published like the Cepu Block in East Java.
According to him, the government also encouraged oil and gas contracts to be signed after the issuance of Government Regulation no. 79/2010 can get tax breaks. Teguh estimated that there were about four oil and gas contracts signed after 2010 or after the government regulation on cost recovery was issued. He explained that contracts signed after 2010 could not apply the assume and discharge scheme through the revision of Government Regulation No. 79/2010. This is because the provision of tax facilities for the types of local taxes and levies cannot be given because the two types of taxes are not regulated in the regulation.
Teguh said that the implementation of assuming and discharge will facilitate the calculation of the project's economy because contractors are no longer subject to additional taxes that arise for upstream oil and gas activities. However, he considered it should have a positive impact on investors. Not everything is given. There are regional taxes and levies that are not covered.
Director of Financial Control for the Special Task Force for Upstream Oil and Gas Business Activities (SKK Migas), Parulian Sihotang, said that until now there has not been any discussion regarding the mechanism for tax returns or refunds after the revision of Government Regulation No.79/2010.
Bisnis Indonesia, Page-30, Wednesday, Oct 19, 2016
Bojonegoro Regency Government To Clarify Oil Production Sharing Funds
The district government of Bojonegoro, East Java, plans to clarify by asking the Minister of Finance for information regarding the decline in Revenue-Sharing Funds (DBH/RSF) for oil and gas from a target of IDR 1.4 trillion to IDR 910 billion. Head of the Regional Revenue Service of the Bojonegoro Regency Government, Herry Sudjarwo, is pessimistic that this clarification step will be successful, after seeing that the state budget has not improved. He said that the oil and gas RSF received by the region this year from the target of Rp 910 billion is still around Rp. 600 billion, as of October.
Looking at the budget year with only two months remaining, it is unlikely that there will be additional transfers of oil and gas RSF from the Government. We do not know how to regulate budget allocations in the Regional Revenue and Expenditure Budget (APBD) which have had to revise several times due to lower oil and gas RSF revenues. He explained that the region last year received an oil and gas RSF of Rp. 812.7 billion, but in the calculation, it turns out that there is still an excess of Rp. 59 billion which is calculated this year.
Thus, the excess revenue from oil and gas RSF last year was calculated this year so that the target for oil and gas RSF recovery is decreasing. The oil and gas RSF target is to decrease, plus there is a cut in the remaining oil and gas RSF channel from last year. He added that the targeted land and gas PBB acquisition target of Rp. 326 billion was also not realized because the acquisition was only Rp. 151 billion.
Bhirawa, Page-8, Wednesday, Oct 19, 2016
Tuesday, October 18, 2016
67 Work Areas Become the Backbone of National Oil and Gas Production
Indonesia's oil and gas production currently depends on 67 Working Areas (WA) that have entered the production phase. SKK Migas Head of Public Relations Taslim Z. Yunus said, as of June 2016, there were 289 oil and gas CAs in Indonesia. Of these, the development plan for 85 oil and gas CAs has been approved and has entered the exploitation phase. Meanwhile, 204 oil and gas CAs are still in the exploration phase.
"Of the 85 exploitation WA, only 67 were producing WA, while the other 18 WAs were still under development, said Taslim.
According to Taslim, the burden of the 67 productions WA is heavy considering that most of them are old fields that have been in production for decades.
"As little as 67 WA are disrupted, national production will be affected," said Taslim.
Taslim added, to strengthen national oil and gas production, stakeholders need efforts and support so that other WA that are still in the exploration and development phase can immediately proceed to the production phase. The government holds an auction for oil and gas in WA every year. After the government determines the winner, SKK Migas as the government representative will sign a cooperation contract with the winning contractor.
Activities began with exploration for commercial oil and gas reserves. If successful, the contractor will prepare a development plan that must be approved by the Minister of Energy and Mineral Resources. After approval is obtained, activities can proceed to the development and production phases.
All upstream oil and gas activities from exploration to production are supervised and controlled by SKK Migas. This supervision and control aim to maximize the results of upstream oil and gas business activities for the welfare of the people.
Surabaya Pagi, Page-7, Tuesday, Oct 18, 2016