Minister unveils measures to secure oil, gas revenue amid price volatility
Thursday, March 21 2019 - 01:42 AM WIB
Minister of Energy and Mineral Resources Ignasius Jonan said that the government has taken a number of measures to help ensure non-tax state revenue (or better known here as PNBP) from the oil and gas sector amid volatility in the price oil.
Speaking at a hearing with the House of Representatives Commission VII on energy and mining on Wednesday, Jonan said that oil price is a key factor affecting state revenue from the oil and gas sector. Revenue will increase if crude price rises, and down if crude price declines.
The government has set non-tax revenue from the oil and gas sector this year to reach Rp 168.62 trillion. As per March 15, the PNBP reached Rp 20.64 trillion. “The PNBP target of Rp 168 trillion is based on the assumption of ICP at $70 per barrel. This is a challenge,” he said. The average ICP in the January-February 2019 period stood at $57.93 per barrel.
Last year, PNBP from the oil and gas sector reached Rp 150.33 trillion, higher than the Rp 86.46 trillion target.
He said that the introduction of a new gross split production sharing contract in early 2017 would help cope with downside risk in state revenue as under this system, which replaces the cost recovery system, the state budget would no longer reimburse the expenses of oil and gas contractors. “This will help reduce cost recovery payment in the state budget,” he said.
Other measures being implemented include curbing illegal oil tapping and illegal drilling activities; enhance oil recovery program to help arrest natural declining production rate at aging fields; accelerating drilling activities, and workover and services. “We’ll make efforts to help ensure (oil and gas lifting) does not miss the target,” he said.
He said that the ministry has also speed up the approval process of plan of development (POD), work program and budget of oil contractors, and authorization of expenditure.
He said that the ministry is also accelerating the tender process of oil and gas blocks as well as renewal process of existing production sharing contracts or the transfer process of expired contracts to other contractors.
Editing by Reiner Simanjuntak