INDONESIAN PRODUCTION SHARING CONTRACT (PSC) FISCAL REGIME

Hazuardi & Jonathan Setyoko

The 4th

PPM Project Workshop Cambodia Khmer Basin Case Sudy December 2004

FISCAL REGIME

1. 2. 3. 4. 5. 6. 7.

First Tranche Petroleum (FTP) Investment Credit (IC) Cost Recovery Sharing Split (Equity to be Split) Domestic Market Obligation (DMO) Tax Structure No Royalty

BASIC PSC ECONOMIC MODEL

Gross Revenue Investment Credit is considered as a part of cost recovery (*) Gross Revenue= (Oil Sale x Oil Price) + (Gas Sales x Gas Price) FTP= 20% x Gross Revenue

FTP (20%)

(-) (-)
Cost Recovery

Cost Recovery is taken from Gross Revenue after FTP deduction

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

Oil Split, Govt : Contr. = 85 : 15 Gas Split, Govt : Contr. = 65 : 35 (After Tax Figure!!)
Contractor Share

Government Share

(+)
Net DMO

(-)

Current Regime: Tax Level is 44%

Tax

DMO is calculated based on Contractors Oil share and paid by Contractor to Govt. No DMO for Gas Taxable Income= Contractor Share DMO paid

(-) (+)

(+)

Contractor Take = Contractor Share DMO Paid Tax Costs + Cost Recovery Government Take Contractor Take Govt. Take = Govt. Share + DMO + Tax

(*) investment credit is based on tangible capital.

BASIC CONCEPT

Sharing Split

Sharing Split

100%

Sharing Split

Sharing Split

Government Share

Contractor Share
( subject to Indonesian income tax)

SUMMARY SHARING MECHANISM

LIFTING - MBBL
5,000 ICP / BBL $20.00 GROSS REVENUE $100,000 First Tranche Petroleum $20,000 COST RECOVERABLES $50,000 EQUITY TO BE SPLIT $30,000 $14,643
GOVERNMENT SHARE

PROD.FACILITIES $41,176

INVESTMENT CREDIT $7,000 DEPRECIATION $17,500

EXPLORATION CAPITAL NON-CAPITAL $1,000 $4,000 DEVELOPMENT CAPITAL NON-CAPITAL $5,000 $5,000 NON-CAPITAL $25,500

$5,357 CONTR. SHARE $13,393

$35,989

DMO
$897 DMO FEE $90

PRODUCTION CAPITAL NON-CAPITAL $50,000 $12,000

GOV'T TAX
$8,618 NET CONTR.SHARE $3,968

GEN & ADMIN 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

TOTAL INDONESIA SHARE $45,414

TOTAL CONTRACTOR SHARE

$53,968

THANK YOU..