Profit Sharing Contract on Oil and Gas Pursuant to Act Number 22 Year 2001

Abstract

Oil and gas are nonrenewable energy resources that are strategically under the powers of the state, the Republic of Indonesia. The oil and gas management should optimally be implemented for the purpose of providing people’s prosperity and welfare. The legal issues studied are the regulating profit sharing contract on oil and gas management in Indonesia. The type of the research is a legal research that is used to solve the appearing legal problems, and to prescribe what should be. The research uses primary and secondary legal materials. The result shows that according to Act No. 22 of 2001, the oil and gas management has changed from the centralized and monopolistic management into the decentralized one, so that it becomes better. Article 6 regulates upstream activities in the oil and gas business activities which are applied and controlled through profit sharing contract. The profit sharing contract shall contain at least the following terms and conditions, such as: (a) the ownership of natural resources shall remains on the hands of the government up to delivering them; management controlling operations shall be under the authority of the implementing agency; (b) entire capitals and risks shall be borne by enterprises and permanent enterprises; (c) the change of the statute shall separate upstream and downstream industry of oil and gas; (d) the mining authority shall return to the government not to Pertamina or enterprise; and (e) the enterprise that wants to invest in oil and gas sector shall sign profit sharing contract with the Implementing Agency for Oil and Gas (SKK Migas). Production sharing for oil and gas management in Indonesia is obtained from the production after being deducted with operating costs; the production is shared to the state and the contractor i.e. generally 85% of net oil production to the state and 15% to the contractor, and 65% of net gas production to the state and 35% to the contractor.