TAF PUBLISHING

This research explores two schemes of oil and gas PSC. First, Cost Recovery (old scheme) that the investor earned a production cost refund. At the same time, the second scheme is Gross Split (new scheme), which is the production- sharing system without the cost of recovery. The Gross Split scheme was implemented by the Minister of Energy and Mineral Resources, Ignatius Jonan, in early 2017 in response to the concerns of People's Representative Council (DPR) Commission VII that the Cost Recovery scheme was no longer profitable for the Government. Thus, there should be a new one that is better, beneficial, yet attractive to investors to entrust the Indonesian oil and gas business. The study was conducted at PT XYZ, the first PSC Company which implemented the Gross Split scheme after its contract period under the Cost Recovery scheme ended in January 2017. The study focuses on two cases of off-shore oil and gas development projects, X and Y, by using economic capital budgeting indicators, such as NPV, IRR, and Payback Period. In addition, oil and gas fiscal calculations are done equally with Net Contractor Take and Government Take, then analyzed the variable's sensitivity that affects its economic project. The results showed that Gross Split scheme projects have better NPV and IRR values than the Cost Recovery scheme. As for the Payback Period, both schemes had the same value. This means that the economic value of the Gross Split scheme project is better. However, it turns out that the Government Takes value is much smaller. While from the sensitivity analysis, the amount of production and price is very sensitive to both economic projects and the widespread on the Gross Split scheme. It can be concluded that the PSC Gross Split scheme will benefit the Contractor if it is accomplished with good planning of Work Program & Budgeting (WPB), accurate calculation of oil and gas reserve, timely development of oil and gas facilities, along with the efficient use of production costs. For the Government, although the income is smaller, on the other hand, it is no longer burdened with cost recovery of production, which has been disrupting the state's finance in the development of exploration and domestic oil and gas production.