Selecting Appropriate Oil-Share Contract Scheme for Rejuvenating Marginal Field in Central Sumatra Basin

Ariyon, Muhammad and Dewi, Eka Kusuma and Novriansyah, Adi (2020) Selecting Appropriate Oil-Share Contract Scheme for Rejuvenating Marginal Field in Central Sumatra Basin. In: 3rd International Conference On Science And Innovated Engineering, 17 Maret 2020.

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Abstract

The global economy's unfavorable condition and the excessive portion of cost recovery yield an uneconomic situation for the contractors. To bring back the situation and the Contractor's spirits to continue investing in Indonesia, the Indonesian Government provides incentives and other alternatives for contractors to amend the conventional Production Sharing Contract (PSC) scheme with PSC Gross Split scheme based on regulations of the Minister of Energy and Mineral Resources Number 8 and Number 52 years 2017. However, the new scheme should prove its positive feasibility through economic simulation under both schemes in the worst field condition such as marginal conditions, a condition the oil production continuously declines from time to time. We select the YZ field in the Central Sumatra Basin or Rokan Block, Riau Province. This study aims to compare the feasibility of the project under both schemes and select the more appropriate option for rejuvenating YZ marginal field. Based on the results of calculations using the conventional PSC, the Net Present Value (NPV), Internal Rate of Return (IRR), and Pay Out Time (POT) values are 78.35 M US$, 10.92%, 3.0 years, respectively. Moreover, Applying PSC gross split results NPV, IRR, and POT 621.38 M US$, IRR 15.73%, and 3.29 years consecutively. PSC gross-split scheme seems attractive for bringing more revenue, which can rejuvenate the activity in the marginal oil field. Sensitivity analysis results oil price and investment are the most sensitive parameters for conventional and gross-split PSC. Therefore, feasibility of marginal oil field under conventional PSC is highly depends on oil price while gross-split PSC affects in investment parameter.

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