In January 2017, under Minister Regulation No 8 of 2017, the Indonesian government announced the release of a new Production Sharing Contract (“PSC”) model, the Gross Split PSC. The updated model contains changes aimed to encourage investment in Indonesia and more efficient operatorship.
The new Gross Split PSC will apply to any new PSC entered into by the State and a Contractor. For existing PSCs, which use the cost recovery model, the Contractor will have the option to switch over to the Gross Split PSC. For expiring PSCs where an extension has already been approved, the cost recovery PSC will continue to apply unless the Contractor wishes to switch to a Gross Split PSC. For expiring PSCs where no extension has been approved, the new PSC will be in the form of the Gross Split PSC.