Indonesia Upstream Fiscal and Regulatory Report - Low prices Promt Fiscal Changes but Regulation Remains Uncertain Summary "Indonesia Upstream Fiscal and Regulatory Report - Low prices Promt Fiscal Changes but Regulation Remains Uncertain", presents the essential information relating to the terms which govern investment into Indonesia's upstream oil and gas sector. The report sets out in detail the contractual framework under which firms must operate in the industry, clearly defining factors affecting profitability and quantifying the state's take from hydrocarbon production. Considering political, economic and industry specific variables, the report also analyses future trends for Indonesia's upstream oil and gas investment climate. Scope - Overview of current fiscal terms governing upstream oil and gas operations in Indonesia - Assessment of the current fiscal regime's state take and attractiveness to investors - Charts illustrating the regime structure, and legal and institutional frameworks - Detail on legal framework and governing bodies administering the industry - Levels of upfront payments and taxation applicable to oil and gas production - Information on application of fiscal and regulatory terms to specific licenses - Outlook on future of fiscal and regulatory terms in Indonesia Reasons to Buy - Understand the complex regulations and contractual requirements applicable to Indonesia's upstream oil and gas sector - Evaluate factors determining profit levels in the industry - Identify potential regulatory issues facing investors in the country's upstream sector - Utilize considered insight on future trends to inform decision-making
Table of Contents
1 Table of Contents 1 1.1 List of Tables 2 1.2 List of Figures 2 2 Regime Overview 3 3 Fiscal Take Assessment 5 4 Key Fiscal Terms 6 4.1 Bonuses 6 4.2 First Tranche Petroleum 7 4.2.1 Conventional PSAs 7 4.2.2 Unconventional PSAs 7 4.3 Cost Recovery 7 4.3.1 Cost Recovery Limit - Conventional 7 4.3.2 Cost Recovery Limit - Technical Assistance Contracts 7 4.3.3 Cost Recovery Limit - Unconventional 8 4.3.4 Recoverable Costs 8 4.3.5 Marginal Field Uplift (2005 Onwards) 10 4.3.6 Investment Credit 10 4.4 Profit-Sharing 11 4.4.1 Post-2001 Conventional PSAs 11 4.4.2 Historical Conventional PSAs 11 4.4.3 Unconventional PSAs 12 4.4.4 Technical Assistance Contracts 13 4.5 Direct Taxation 13 4.5.1 Corporate Tax 13 4.5.2 Branch Profits Remittances Tax 13 4.5.3 Deductions and Depreciation 13 4.6 Indirect Taxation 14 4.6.1 Value Added Tax (VAT) 14 4.6.2 Land and Building Tax 14 4.6.3 Customs Duties 14 4.7 Domestic Market Obligation 14 4.7.1 First Generation 14 4.7.2 Second Generation 14 4.7.3 Third Generation 14 4.7.4 Unconventional and Coal Bed Methane 15 5 Regulation and Licensing 16 5.1 Legal Framework 16 5.1.1 Governing Law 16 5.1.2 Contract Type 16 5.1.3 Title to Hydrocarbons 16 5.2 Institutional Framework 17 5.2.1 Licensing Authority 17 5.2.2 Regulatory Agency 17 5.2.3 National Oil Company 17 5.3 Licensing Process 17 5.3.1 Licensing Rounds 17 5.3.2 Bidding 18 5.4 License Terms 18 5.4.1 Duration 18 5.4.2 Title to Equipment 18 5.4.3 Relinquishment 18 6 Outlook 19 7 Contact Information 20
List of Tables
Table 1: Summary 3 Table 2: Indonesia, Production Bonuses (US$ mil), Bawean PSA (1981) 6 Table 3: Indonesia, Production Bonuses (US$ mil), Bengara II (1997) 6 Table 4: Indonesia, Unconventional Gas Contract Model, Production Bonuses, 2015 6 Table 5: Indonesia, First Tranche Petroleum, 1998-2016 7 Table 6: Indonesia, FTP - Sliding Scale PSA, 2016 7 Table 7: Indonesia, Depreciation Groups for Oil Projects (%), 2016 8 Table 8: Indonesia, Depreciation Groups for Oil Projects, 2016 8 Table 9: Indonesia, Useful Life of Assets (years), 2016 9 Table 10: Indonesia, Useful Life of Assets for Second-Generation Contracts (years), 2016 9 Table 11: Indonesia, Third-Generation Investment Credit, 2016 10 Table 12: Indonesia, Post-Tax Profit-Sharing Rates, Historical Contracts 11 Table 13: Indonesia, Third-Generation PSA Incentives (1988-2001), Production Sharing after Taxes 11 Table 14: Indonesia, Pre-tertiary Oil Production Sharing after Taxes (1989-present) 12 Table 15: Indonesia, Production Sharing before Taxes for Coal Bed Methane 12 Table 16: Indonesia, Sliding-Scale PSA, 2015 12 Table 17: Indonesia, Gross Split-Sliding-Scale PSA, 2015 13 Table 18: Indonesia, Corporate Tax Rates, 2016 13 Table 19: Indonesia, DMO Prices, 2016 14 Table 20: Indonesia, Third-Generation PSA DMO Price as Share of Crude Oil Export Price (%), 2016 15 Table 21: Indonesia, Work Program, BENGARA II (1997) 18
List of Figures
Figure 1: Regime Flow Chart 4 Figure 2: Indonesia, Indicative NPV10 per boe, Fiscal Take and IRR Comparison - Internal, 2016 5 Figure 3: Indonesia, Indicative NPV10 per boe and IRR Comparison - Regional, 2016 5 Figure 4: Indonesia, Legal Framework 16 Figure 5: Indonesia, Institutional Framework 17
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