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Incentives for Marginal Field Development in Indonesia
A marginal field, from an economic point of view, is a field with an Rate of Return (ROR) less than Minimum Attractive Rate of Return (MARR) at current fiscal terms. Without some incentives, these fields will remain uneconomic and oil and gas will remain in the ground through the end of the contract period. Therefore, neither the Production Sharing Contractors (PSC's) nor Government of Indonesia (GOI) will benefit from this situation.
This paper discusses several scenarios about how incentives should be provided for developing marginal fields in Indonesia in order to achieve a "win-win situation" for both the GOI and Production Sharing Contractors.
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