Jakarta – Publish What You Pay (PWYP) Indonesia held a PWYP Knowledge Forum (PKF) with the theme Knowing the Oil and Gas Production Sharing Contract (PSC) in Central Jakarta on November 14, 2022. PKF is a discussion and knowledge-sharing forum organized regularly by the PWYP Indonesia coalition to increase understanding and capacity and develop a public discourse on current issues, topics, and policies in the spotlight. The PKF invited A. Rinto Pudyantoro, a Professional in Energy and Business Economics, Lecturer at Pertamina University, and a long career in the Special Task Force for Upstream Oil and Gas (SKK Migas).

Rinto began his presentation by introducing upstream oil and gas activities in general, starting from exploration activities, namely searching and proving, and exploitation activities, namely lifting and extracting. In the exploration stage, the position of oil and gas flow must first be known from the Source Rock (Generation), which is the bottom layer, then migrates (Migration) and then accumulates (Accumulation) into various types of oil and gas, the point where people look for oil and gas characteristics first to be taken. Furthermore, to explore deeper, activities using seismic systems are carried out. In the exploitation stage, drilling activities are then carried out.

“The oil and gas business itself has a very high risk where if the project is not successful at one of the stages, it is inevitable that it will fail 100%. So it needs accuracy and good reading of the situation. So that in this coaching process, it is hoped that it can produce oil and gas optimally, “explained Rinto.

Then Rinto introduced participants to the concept of PSC, where the basic principle is that the contractor provides all the funds and bears all the risks, operations management in the hands of SKK Migas, and ownership of mining materials to the government until delivery. The other fundamental principles in the PSC are that the issuer has the right to recover operating costs from the sale of oil or gas (if there is production); production only exists if it is declared commercial by the Government; the exploration period of 6 (six) years plus 4 (four) years extension; and SKK Migas approved the WP&B (Work Program & Budget), costs and engineering methods used.

Rinto informed that the management of oil and gas resources has gone through a long journey. In the years before the 1960s, Indonesia used the concession method; from 1960-1966, the government began using a work contract (contract of work). The work contract itself did not run smoothly, then PSC Law Number 8 of 1971 was issued, and in 2001 it was corrected by Cooperation Contract Regulations as stipulated in Law Number 22 of 2001 concerning Mining Oil and Gas (UU Migas). The final PSC Gross Split regulation was issued in 2017 – now. As for the upstream oil and gas business flow through PSC Signing, Exploration Period, POD Agreement, Field Development Period, Exploitation Period, Production Period, and Abandonment.

Author: Raudatul Jannah
Reviewer: Aryanto Nugroho