The Impact Of AARF (Abandonment And Restoration Funds) Obligation Toward Block Economical Aspect For Contractor Who Taking It Over Previous Non- Obliged Production Sharing Contract (Case In The “B” Block In Aceh)

Abstract

The objective of this paper is to endorse some concerns about the transition of implementing Peraturan Menteri ESDM No.15 Year 2018 ("Permen 15/2018") considering the right & obligation in existing and previous Production Sharing Contract ("PSC"). The obligation of Contractor to do site restoration has no objection, but the Permen 15/2018 requires an installment targeting the total amount of abandonment and restoration by the time it will be performed. It seems not fair for the New Contractor (in case of termination) since the previous PSC was not required to deposit the fund. It means the new Contractor who performs the restoration will spend higher site restoration cost compared to the benefit they get from the block.

The method that the writer is going to use in this paper is by running a simulation of 'fund obligation' starting from the usage of the assets or facilities until it will be abandoned. The facilities here mean everything needs to be restored, such as processing  facilities, drilling/well facilities, pipelines, flowlines, and other supporting facilities. Even though the fund is not obliged to collect (for Old Contractor), the obligation and responsibility of Contractor to do site restoration is a must. Indeed, it is in the PSC (section right and obligation). Furthermore, the Old Contractor had already 'taken more benefit' from the block which should be in line with the responsibility for the environment.

By running this simulation, the writer found that the new Contractor suffers most of the restoration cost. The facility itself was built around the 1970s, the block would had been expired in 2018 and the handover of the entire Participating Interest was done in 2015 when the block produce only the remaining tail gas. The installment of AARF was started in 2016. It is forecasted the facilities to be abandoned entirely during the period of New Contractor operatorship which means 100% of the fund of the New Contractor.

The conclusion of this paper is the obligation of keeping the environment safe and clean is obliged to each and everyone on the planet. Especially in Indonesia, it is stated in the PSC and the Law. To reach this, the writer has some recommendations:
1. Government shall persuade all the stakeholders, especially the Old Contractor to comply with this obligation.
2. Even though the obligation of fund installment does not commit the Old Contractor, it could be calculated linear based on the operatorship period to see the relative fund the Old Contractor ‘responsible’ for the block.

This study had been initially discussed with the Old Contractor, but neither commitment nor agreement reached yet until now to the above ASR obligation.