How the Indonesian Oil & Gas Regulator manages capital budgeting and cost recovery related to production sharing compensation
The Client
SKKMigas is the Indonesian upstream oil and gas regulatory. They are responsible for managing the development, planning, capital project budgeting and spending for the entire oil and gas industry in Indonesia. SKKMigas represents the government of Indonesia as the owner and guardian of all the oil and gas assets in Indonesia. All operators work under the regulatory supervision of SKKMigas in Indonesia.
The Problem
Historically, Indonesia has been challenged with the many difficulties related to regulatory compliance and control where significant capital spending is incurred to establish major critical infrastructure. These challenges include:
- Seeking Tighter Control
- Better Operating Conditions
- Stronger Compliance With Regulations
- More Certainty
- Less Risk Regarding Delivery of Critical Infrastructure Projects
The Solution
SKKMigas decided to address all of the challenges in conjunction with Resource Energy Solutions. Since then, SKKMigas and RES have been working together to vastly improve the following:
- AFE Submission
- Cost Recovery Management System
- Production Sharing
The resulting project has been a very high profile for the Indonesian government and has garnered support from the highest levels in the country. This includes transparency mandates from both ministers and the president of Indonesia.
