Oil and gas contractors who will submit budgets for new oil and gas field projects cannot sleep soundly. The Ministry of Energy and Mineral Resources (ESDM) will examine in detail the budget and proposed work program. Understandably, at this time, the Ministry of Energy and Mineral Resources is making savings on the cost recovery of oil and gas contractors on new oil and gas projects.
Deputy Minister of Energy and Mineral Resources (ESDM) Arcandra Tahar said that the efficiency of the cost of recovery will be imposed on the development plan or plan of development (POD) of the newly proposed oil and gas project.
"The upcoming PoD-PoDs are for example the IDD Chevron, Masela Block, and East Natuna Block. We will see the size of the new ones and reduce the costs," said Arcandra.
The Masela Block
According to him, the government will reduce the cost recovery from the POD that will be proposed by oil and gas contractors, namely in terms of capital expenditure (capex) and operational expenditure (opex).
"We can reduce cost recovery with capex and that is the component, so we will see," explained Arcandra.
Meanwhile, the POD that has already occurred will not be recalculated. Arcandra said the government must also be able to maintain investor confidence. That is why the government will continue to respect existing contracts.
"It will not be changed, we will respect the existing one first, because it has been agreed upon, because the project has already started. How can I change it again? Unless there is an administrative error there,"
Denie S. Tampubolon, Senior Vice President of Upstream Business Development at PT Pertamina, has not been able to comment on the efficiency of cost recovery for the East Natuna project. The East Natuna project value reaches US $ 24 billion.
Inpex Corp's Senior Manager Communication and Relations Usman Slamet and Chevron's Corporate Communication Manager, Prasasti Asandhimitra, have not yet responded to the confirmation that there is a need to change capital expenditures in the Masela and Chevron IDD projects if later submitted.
Currently, Inpex has not submitted a proposal to revise the Masela project, but the estimated investment is US $ 15 billion, while the government has not approved the Chevron project with an investment of up to US $ 7 billion.
Fahmi Radhi, an Energy Observer from Gajah Mada University, suspects that so far, cost recovery has been the target of rent-seeking through mark-ups and other modes, namely increasing the purchase price of drills, changing drill bits, which can still be used. Then, another mode is to include various expenses that are not supposed to be a cost recovery component.
"The rent-seeking is carried out by companies that obtain sub contracts in the transportation of equipment needed for drilling,".
The government can start thinking about changing the production sharing contract (KPS) scheme to reduce the total cost recovery to a ratio of 60:40, by reducing the cost recovery borne by the government by up to 50%.
Kontan, Page-14, Thursday, Oct 20, 2016
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