Enhancing Economic Viability in Late-Life PSC Blocks: Addressing Fiscal and Operational Challenges in Indonesia's Central Sumatra Basin

Abstract Indonesia's Central Sumatra Basin hosts numerous late-life oil fields under Production Sharing Contracts (PSCs) that are approaching their economic limits. These mature assets face a combination of declining reservoir performance, aging infrastructure, rising operating costs, and rigid fiscal terms that constrain timely reinvestment. This paper examines the integrated technical, operational, and fiscal strategies implemented in one such block—recently acquired by EMP Group (Energi Mega Persada (EMP), 2023)—to restore economic viability and extend productive field life (Brown & Dobson, n.d.). The study evaluates production and cost performance, identifies critical bottlenecks, and assesses a range of development options, from minimal maintenance programs to aggressive Enhanced Oil Recovery (EOR) and exploration campaigns. Scenario-based Cost Benefit Analysis (CBA) and sensitivity testing on oil price and cost variations reveal that while aggressive investment offers the greatest return potential, it carries significant financial risk under the current PSC framework. The findings highlight the necessity of targeted fiscal incentives—such as flexible cost recovery, tailored depreciation schedules, and program-specific profit splits—to align investment conditions with the risk profile of a mature, marginal field. Field-level interventions, including infill drilling, selective application of Huff and Puff (H&P) IOR, and facility optimization, have demonstrated measurable improvements in production, reduced unit operating costs, and shortened execution timelines. Lessons from this case offer a transferable model for sustaining production, maximizing recovery, and extending economic life in other mature PSC assets, particularly when technical improvements are coupled with adaptive, incentive-driven fiscal terms.