REPUBLIKA.CO.ID, JAKARTA -- Deputy Energy and Mineral Resource (ESDM) Minister Arcandra Tahar stressed the importance of transparency in all schemes of system supporting oil and gas explorations and exploitation.

"We are seeking to create a system all transparent," Arcandra said in a statement made available to Antara news agency here on Sunday. 

One example of transparency in implementation in the oil and gas sector is the use of the Gross Split scheme in place of production sharing, he cited. 

The ministry wants to create transparency to encourage investment in oil and gas explorations and exploitation in Indonesia, he added. 

Arcandra said weaknesses in the management of oil and gas industry in the past was failure in responding to setting split under Production Sharing Contract (PSC) with cost recovery scheme. 

In addition, the cost recovery scheme could not predict the risk of business in term of time before the adoption of the regulation of ESDM Minister No. 8 of 2017 on Gross Split. 

"The types of Gross Split scheme adopted in Indonesia is the only one in the world . There are Gross Split in other forms in other countries the world, but split based on business risks is adopted only in Indonesia. In the United States, it is based on royalty and tax. The tax is fixed, the royalty is negotiable," he said.

Arcandra denied suggestion linking Gross Split scheme with the low interest shown by investors in taking part in auction for oil and gas concession at present. He said the factors attributable to low interest in oil explorations in the country is not Gross Split scheme but the condition of the oil and gas fields. 

"What makes the difference is the 'behaviors of the fields . The fields may not be could commercially feasible," he said. 

He said the Gross Split would give greater clearance for investors holding the cooperation contracts (KKKs). 

"In the past what was the incentive for investing in difficult fields ? It was not clear. Now it is clear," he said. 

The plan is the gross split scheme would be put in the Oil and Gas Law to guarantee certainty in investment, he added. 

"If it has been running we would put the Gross Split regulation in the Law," he said. 

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