Oil and Gas in Indonesia
Investment and Taxation Guide 2019 – 10th Edition
We welcome you to the 10th edition of PwC Indonesia’s Oil and Gas in Indonesia – Investment and Taxation Guide. This edition outlines the latest tax and regulatory changes that have occurred in the oil and gas industry over recent years, including our views on recent regulatory developments surrounding the new “Gross Split” PSCs, introduced in 2017.
Oil and gas production has a long history in Indonesia, after the first oil discovery in North Sumatra in 1885, with Indonesia being an international pioneer in many areas, including the development of the Production Sharing Contract (PSC) model and the commercialisation of Liquefied Natural Gas (LNG).
However, the industry has not seen significant new developments for a number of years, with many existing contractors having lost interest in further exploration in Indonesia due to regulatory instability and an uncertain investment climate, and few new players are entering the market. Despite the Government’s efforts to stimulate exploration through offers of new acreage and a joint study facility, these initial incentives have not been particularly successful in attracting new investors. More and more, the state oil and gas company, PT Pertamina (Persero) (“Pertamina”) is being tasked with managing the sector, including taking over the operation of expiring production sharing contracts (“PSCs”) from international oil and gas companies, which still produce the majority of the country's oil and gas.
