Contracts & Commercial

Government wants Report from Contractors failing to return Tender Document

Date: 14 July 2018; Type: Legal News; Source: Antara

Jakarta, July 14 (ANTARA News) - The government will summon seven oil and gas contractors which have failed to return their tender document until the registration deadline of July3 this year was over.

Oil ans Gas Director General Djoko Siswanto said registration tim had been over but according to a regulation of the Energy and Mineral Resources Minister, the MIGAS Director General is allowed to give an extension with an approval in a committee meeting.

Djoko said the government want to make evaluation, therefore, want to hear from the seven contractors the reason for not returning the tender documents until the last day of registration time.

He said the contractors might still need time to study the feasibility of the oil and gas blocks offered by the government, or they might want additional share under the gross split scheme portion. "We want their reports and hear the reason for not returning the tender documents. That is why we summon them," Djoko said here on Saturday.

The seven contractors were part of those to take part in a regular tender for 19 oil and gas blocks this year.

Meanwhile, chief spokesman of the Energy and Mineral Resources Ministry Agung Pribadi said from 2017 until June, 2018, the government already determined 25 oil and gas contracts under gross split scheme.

The government has introduced the new scheme under which contract is to pay all recovery cost and profit split would slide down and up depending on a number of factors.

Agung said nine of the 25 contracts were the result of auctions of oil and gas blocks in 2017-2018.

He said investment commitments for the 25 gross split contracts reached around US$1 billion or much larger than in the previous years.

He said there was growing trend in investment interest in the oil and gas sector all under the gross split model in the pasty two years.

Under the gross-split scheme, taxes are waived during the exploration phase for operators until profits reach pre-specified levels. Additionally, companies are allowed to delay paying taxes during exploration while developments are reaching optimal production.

The new taxation policies are being refined in an effort to attract upstream investors. Only applicable to newly awarded contracts, the gross-split model offers better terms for acreage with no existing infrastructure.

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