The Legality of Oil & Gas Production Sharing Contract Gross Split Scheme

  • Fakharsyah Hanif Sugiyartomo University of Indonesia
Keywords: management, gross split scheme, income taxes


As an oil producing nation, Indonesia embodied its authority to manage its oil resources through article 33 paragraphs 3 of The Republic of Indonesia Constitution 1945. Regarding the article, this means that the state has the authority to manage Indonesian natural resources, directly or indirectly, through other public and/or private institutions and the profit of such activity shall be for the benefit of the people. This granted the state to appoint other institution, including a National/International Oil Company (NOC/IOC), to manage the exploration and production of oil, as that particular activity is regarded as a high risk and high capital business. In order to do so, according to Law no. 22 2001, the state may appoint a NOC/IOC through a production sharing contract. In this research, it is founded that the regulation that governed a production sharing contract with the gross split mechanism—Ministry of Energy and Mineral Resources Regulation No. 8 2017 jo. Ministry of Energy and Mineral Resources No. 52 2017—does not have a strong legal basis. In overall, the management of oil and gas through the gross split mechanism does not gives a maximum benefit for the state, and does not attract the IOC/NOC interest to explore and produce oil and gas in Indonesia. Therefore, in this paper, the reviewing of oil and gas management through a gross split mechanism is recommended.


Download data is not yet available.

Author Biography

Fakharsyah Hanif Sugiyartomo, University of Indonesia

University of Indonesia


Ahmadov, Ingilab. et al. “How to Scrutinize a Production Sharing Agreement”. International Institute for Environment and Development. (2012): 21.

Cambridge University. “Indonesia and Caltex Pacific Oil Co., P.T. Shell Indonesia, and P.T. Stanvac Indonesia: Heads of Agreement for Petroleum Working Contracts”. International Legal Materials Vol. 3 No. 1. (January 1964): 85.

Indonesia (a). Law No. 22 Year 2001. LN No. 136 Year 2001. TLN No. 4152.

Indonesia (b), Law No. 12 2011, LN No 82 Year 2011, TLN No. 5234

Indonesia (c). Government Regulation No. 79 2010. LN No. 139 Year 2010. TLN No. 5173.

Indonesia (d). Government Regulation No. 35 2004. LN No. 123 Year 2004. TLN No. 4435.

Indrati, Maria Farida. Ilmu Perundang-Undangan (1) (Jenis, Fungsi, Materi Muatan) cet. ke-1. Yogyakarta: Penerbit Kanisius. 2007.

Kelsen, Hans. General Theory of Law and State, Massachusetts: Cambridge University Press. 2003.

Ministry of Energy and Mineral Resources. Ministry of EMR Resources No. 8 Year 2017.

PWC. “Oil and Gas in Indonesia Investment and taxation Guide”. Indonesia Oil & Gas. (August 2011): 43.

Salim, H. Hukum Pertambangan di Indonesia, Jakarta: RajaGrafindo Persada. 2005.

Sutedi, Adrian. Hukum Pertambangan. Jakarta: Sinar Grafika. 2011.

Syamsuddi, Azis. Proses Dan Teknik Penyusunan Undang-Undang. Jakarta: Sinar Grafika. 2011.

How to Cite
Sugiyartomo, F. H. (2019). The Legality of Oil & Gas Production Sharing Contract Gross Split Scheme. Indonesian Journal of Energy, 2(1), 29-37.