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February 1, 2019

West Natuna Exploration Limited - Amendment and restatement of its Duyung Production Sharing Contract, Indonesia


In  February 2019, our client West Natuna Exploration Limited (“WNEL”) signed an amendment and restatement of its Duyung Production Sharing Contract, Indonesia (“Duyung PSC”) with Satuan Kerja Khusus Pelaksana Kegiatan Usaha Hulu Minyak Dan Gas Bumi (“SKK Migas”), the regulator for upstream oil and gas business activities in Indonesia, which facilitated the conversion of the Duyung PSC from a traditional Cost Recovery Production Sharing Contract to a Gross Split Production Sharing Contract. The Gross Split PSC is a new form of production sharing contract, which abolished the cost recovery system first pioneered by Indonesia in 1966. The Gross Split PSC was introduced in January 2017, under Minister Regulation No 8 of 2017, and represents arguably one of the most significant regulatory developments in the history of Indonesia’s oil and gas sector since Law No. 22 of 2001 concerning Oil and Gas.

The conversion of the Duyung PSC from a Cost Recovery Production Sharing Contract to a Gross Split Production Sharing Contract represents a first of its kind in Indonesia and will be used as model for the conversion of a further five production sharing contracts in the following months. 

Merrick White (SIN) and Zoë Bromage (SIN) advised on the Indonesian upstream aspects of the transaction. Hanna Azkiya (SIN), a native Bahasa Indonesian speaker, advised on the translation of the bilingual Duyung PSC.