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INDONESIAN PRODUCTION SHARING CONTRACT (PSC)FISCAL REGIME

Hazuardi & Jonathan Setyoko

PPM Projec tThe 4 t h Work shop Cam bodia K hm er Basin Case Sudy

Dec em ber 2004

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FISCAL REGIME

1. First Tranc he Petroleum (FTP)

2. Investment Credit (IC)3. Cost Rec overy4. Sharing Split (Equity to be Split)

5. Domestic Market Obligation (DMO)6. Tax Struc ture

7. No Roya lty 

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Gross Revenue

FTP (20%)

Cost Recovery

Equity To Be Split

Contractor ShareGovernment Share

Net DMO

Tax

Government Take Contractor Take

(-)

(-)

(-)

(-)

(+)

(+)(+)

(+)

Gross Revenue=(Oil Sale x Oil Price) + (Gas Sales x Gas Price)

FTP= 20% x Gross Revenue

Cost Recovery is taken from Gross Revenueafter FTP deduction

FTP + Profit Oil (Equity To Be Split) is splitamong Government and Contractor.

Oil Split, Govt : Contr. = 85 : 15Gas Split, Govt : Contr. = 65 : 35

(After Tax Figure!!)

DMO is calculated based on Contractor’s Oilshare and paid by Contractor to Govt. No

DMO for Gas

Taxable Income= Contractor Share – DMO paid

Contractor Take = Contractor Share – DMOPaid – Tax –Costs + Cost Recovery

Govt. Take = Govt. Share + DMO + Tax

BASIC PSC ECONOMIC MODEL

Current Regime:Tax Level is 44%

Investment Credit isconsidered as a part of

cost recovery (*)

(*) investment credit is based on tangible capital.

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BASIC CONCEPT 

Sharing Split Sharing Split 

100% 

Sharing Split Sharing Split 

Sharing Split Sharing Split  Sharing Split Sharing Split 

( subject to Indonesian income tax) ( subject to Indonesian income tax) Government Share

Contractor Share

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SUMMARY SHARING MECHANISM

5,000

CAPITAL NON-CAPITAL $5,357

$1,000 $4,000

CAPITAL NON-CAPITAL

$5,000 $5,000

NON-CAPITAL

$25,500

CAPITAL NON-CAPITAL

$50,000 $12,000

CAPITAL NON-CAPITAL

$1,000 $4,500

NOTES:

- Conventional PSC

- Sharing Split 85/15 at 44% Tax

- Prior Years' Depreciation $3,250- Investment Credit 17% Oil Production Facilities

$14,643

$53,968CONTRACTOR SHARE

TOTAL

TOTAL

INDONESIA SHARE

$45,414

$8,618

NET CONTR.SHARE

$3,968

$897

DMO FEE

$90

GOV'T TAX

DMO

GOVERNMENT SHARE

$35,989

CONTR. SHARE

$13,393

PROD.FACILITIES

$41,176

COST RECOVERABLES

$50,000

$30,000

EQUITY TO BE SPLIT

$20,000

DEPRECIATION

$17,500

$7,000

INVESTMENT CREDIT

$100,000

GROSS REVENUE

First Tranche Petroleum

LIFTING - MBBL

ICP / BBL$20.00

DEVELOPMENT

PRODUCTION

GEN & ADMIN

EXPLORATION

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THANK YOU..