Empirical evidence, commercial performance and extended risk analysis of Indonesian petroleum production sharing contracts

Since the introduction of the petroleum Production Sharing Contract (PSC) system by the Indonesian government in the 1960s, this system has been considered a model for other petroleum-producing nations to emulate. Unfortunately, with the continual decline in performance displayed by this partnership...

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Main Author:	July Usman, Rien Handarwati
Format:	Thesis
Language:	English
Published:	2006
Subjects:	Unspecified
Online Access:	http://eprints.utm.my/id/eprint/35093/1/RienHandarwatiUsmanMFM2006.pdf
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id	my-utm-ep.35093
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spelling	my-utm-ep.350932017-10-12T05:11:14Z Empirical evidence, commercial performance and extended risk analysis of Indonesian petroleum production sharing contracts 2006 July Usman, Rien Handarwati Unspecified Since the introduction of the petroleum Production Sharing Contract (PSC) system by the Indonesian government in the 1960s, this system has been considered a model for other petroleum-producing nations to emulate. Unfortunately, with the continual decline in performance displayed by this partnership, its capability as an attractive partnership system has been questioned. This thesis proposes three main factors contributing towards the dismal performance of the Indonesian PSC arrangement: the commercial viability of the petroleum Exploration & Production (E&P) industry, the PSC as a system and the negative perception of the investment climate in Indonesia itself. Employing the cash flow analysis and the risk analyses using the Monte Carlo simulation technique and Analytic Hierarchy Process (AHP) in the Benefit-Cost-Risk framework, the research concludes that the commercial capability and productivity of the Indonesian PSC have declined in recent years. The Monte Carlo simulation shows that the tax consolidation approach proposed for the frontier areas has not contributed effectively in consolidating the production partnership system, whilst enhancement of several PSC variables as incentives are required and should be offered based on its production rate profile. The result of AHP analysis points to the need to consider the application of the Modern Royalty and Tax system as an alternative to the PSC system. This study strongly suggests the role of foreign direct investment climate in Indonesia as the critical factor in improving the Indonesian PSC system as an attractive mode in managing Indonesia’s growing petroleum E&P industry. 2006 Thesis http://eprints.utm.my/id/eprint/35093/ http://eprints.utm.my/id/eprint/35093/1/RienHandarwatiUsmanMFM2006.pdf application/pdf en public http://dms.library.utm.my:8080/vital/access/manager/Repository/vital:62404?queryType=vitalDismax&query=Empirical+evidence%2C+commercial+performance+and+extended+&public=true masters Universiti Teknologi Malaysia, Faculty of Management and Human Resource Development Faculty of Management and Human Resource Development
institution	Universiti Teknologi Malaysia
collection	UTM Institutional Repository
language	English
topic	Unspecified
spellingShingle	Unspecified July Usman, Rien Handarwati Empirical evidence, commercial performance and extended risk analysis of Indonesian petroleum production sharing contracts
description	Since the introduction of the petroleum Production Sharing Contract (PSC) system by the Indonesian government in the 1960s, this system has been considered a model for other petroleum-producing nations to emulate. Unfortunately, with the continual decline in performance displayed by this partnership, its capability as an attractive partnership system has been questioned. This thesis proposes three main factors contributing towards the dismal performance of the Indonesian PSC arrangement: the commercial viability of the petroleum Exploration & Production (E&P) industry, the PSC as a system and the negative perception of the investment climate in Indonesia itself. Employing the cash flow analysis and the risk analyses using the Monte Carlo simulation technique and Analytic Hierarchy Process (AHP) in the Benefit-Cost-Risk framework, the research concludes that the commercial capability and productivity of the Indonesian PSC have declined in recent years. The Monte Carlo simulation shows that the tax consolidation approach proposed for the frontier areas has not contributed effectively in consolidating the production partnership system, whilst enhancement of several PSC variables as incentives are required and should be offered based on its production rate profile. The result of AHP analysis points to the need to consider the application of the Modern Royalty and Tax system as an alternative to the PSC system. This study strongly suggests the role of foreign direct investment climate in Indonesia as the critical factor in improving the Indonesian PSC system as an attractive mode in managing Indonesia’s growing petroleum E&P industry.
format	Thesis
qualification_level	Master's degree
author	July Usman, Rien Handarwati
author_facet	July Usman, Rien Handarwati
author_sort	July Usman, Rien Handarwati
title	Empirical evidence, commercial performance and extended risk analysis of Indonesian petroleum production sharing contracts
title_short	Empirical evidence, commercial performance and extended risk analysis of Indonesian petroleum production sharing contracts
title_full	Empirical evidence, commercial performance and extended risk analysis of Indonesian petroleum production sharing contracts
title_fullStr	Empirical evidence, commercial performance and extended risk analysis of Indonesian petroleum production sharing contracts
title_full_unstemmed	Empirical evidence, commercial performance and extended risk analysis of Indonesian petroleum production sharing contracts
title_sort	empirical evidence, commercial performance and extended risk analysis of indonesian petroleum production sharing contracts
granting_institution	Universiti Teknologi Malaysia, Faculty of Management and Human Resource Development
granting_department	Faculty of Management and Human Resource Development
publishDate	2006
url	http://eprints.utm.my/id/eprint/35093/1/RienHandarwatiUsmanMFM2006.pdf
_version_	1747816329179561984

Empirical evidence, commercial performance and extended risk analysis of Indonesian petroleum production sharing contracts

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