Decision Analysis on Selecting the Best PSC Scheme between Cost Recovery vs. Gross Split for Block Extension, Case Study: Panca Block

This research study about the evolution of contract scheme type in Indonesia’s oil and gas industry started in the early 19th century using concession contract agreement change to contract of work and the current well-known existing production sharing contract with cost recovery scheme model. In 2017, the government introduced a new scheme of gross split as an alternative for expired blocks, block extensions, and new block offerings to the contractors. There are various pros and cons of feedback from stakeholders on the new scheme; in order to accommodate the responses, revisions to the regulation were done several times to ensure its attractiveness compared to the existing cost recovery. Since then, when selecting the best-production-sharing contract between the two scheme models based on a comparison of the economic value of the block, there have not been many explanations for the principle of both scheme models’ works. Researchers assess the decision analysis to select the best scheme model using the system thinking model of causal loop diagram through the methodology of qualitative analysis of interviews with the stakeholders to understand the current condition of both scheme models, determine the critical variables that influence decision-making and explore relationships and the value of the critical variables through the feedback loops analysis. Comparison analysis was carried out to decide the best scheme model through the four areas of interest within a block: producing fields, new field development, discovery area, and prospects and leads. The case study of the Panca block evaluates and shows the gross split as the best option for the existing producing fields while cost recovery for the other three areas of interest.