Cost recovery will exceed state revenue: SKK Migas

JAKARTA. Upstream Oil and Gas Regulator SKK Migas has predicted that the recovery amount from oil that the government will return to contractors in 2015 will exceed the oil component that will fall to the government's share.

Head of SKK Migas Amien Sunaryadi stated during a parliamentary hearing here on Monday that the government is expected to earn some US$6.6 to 14 billion as revenue from its share of oil and gas, assuming the oil prices to stay within US$40 to 70 per barrel.

However, the cost recovery that the government is expected to return, assuming the same price band of oil, amounts to US$15.8 to 18.9 billion.

Sunaryadi added that at a price of US$40 per barrel, receipts from oil and gas are expected to amount to US$25.44 billion, of which US$15.8 billion (62 percent) would be distributed as cost recovery, US$3.044 billion (12 percent) to contractors, and US$6.6 billion (26 percent) to the state.

At a price of US$50 per barrel, oil and gas receipts are expected to total US$29.86 billion. Of the amount, US$17.5 billion (58 percent) would constitute cost recovery; while US$3.43 billion (12 percent) would be distributed to contractors, US$8.96 billion (30 percent) would belong to the state.

He further noted that at a price of US$60 per barrel, oil and gas revenue would amount to US$34.16 billion, of which cost recovery would be US$18.41 billion (54 percent); contractors would get US$4 billion (12 percent); and the state would get US$11.75 billion (34 percent).

Moreover, if the price is US$70 per barrel, oil and gas receipts would total US$38.46 billion, constituting US$18.93 billion (49 percent) as cost recovery, US$4.62 billion (12 percent) for contractors, and US$14.92 billion (39 percent) for the state.

The cost recovery and state receipts have been calculated with the assumption that production in 2015 would reach 849 thousand barrels of oil per day and 1.177 million barrels of gas per day, which would be a total production of 2.026 million barrels per day.

In 2014, oil and gas revenue amounted to US$52.67 billion dollars, including US$28.33 billion (54 percent) as cost recovery, US$15.91 billion (30 percent) for the state, and US$8.43 billion (16 percent) for contractors.

Oil production in 2014 stood at 794 thousand barrels per day, while that of gas reached 1.218 million barrels per day, with the price of oil at $US100.48 per barrel.