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Bambang

Bambang Yuwono
Yuwono

Outline
Production sharing Contract
Financial Aspects
‰ Introduction
‰ Basic Principles
‰ Exploration & Development Activities
‰ Production Activities
‰ Supporting Activities
‰ Lifting – Sharing Analysis
‰ Accounting Procedures
‰ Fiscal Terms
‰ Budgeting & Reporting
‰ Budget Preparation

Introduction
Long Term Planning - Contract Years Overview

Field
Field––11Production
ProductionOperations
Operations
Field
Field––22Production
ProductionOperations
Operations
Field
Field––33Production
ProductionOperations
Operations
Activities
Activitiesfor
forField
FieldDevelopment
DevelopmentProjects/POD
Projects/POD(AFE)
(AFE)
Activities
Activitiesfor
forExplorations
Explorations&&Other
OtherProjects
Projects(AFE)
(AFE)
Activities
Activitiesfor
forRoutines
Routines
1

2

3 4

5

Exploration Phase

6 7

8

9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30

Production Phase

the extension may be proposed at a sooner date. The proposal may be either approved or disapproved by the Minister based on the evaluation of BPMIGAS.  Contractor may propose to the Minister through BPMIGAS ammendments to the terms and condition of the contract.  The activities shall commence no later than 180 days as from the effective date (when the contract signed).Basic Principles – terms ‰ General  The term of the PS Contract is 30 years as from the date of the contract signed. and may be extended for 20 years. When it involves the period of gas sales agreement which is beyond the efective date of the contract. .  Contract extension proposed to the Minister through BPMIGAS within 10 to 2 years prior to the original contract expiry date.

.  During the first 3 years of exploration period. the field development shall commence no later than 5 years following the end of the exploration phase.Basic Principles – terms ‰ Exploration  6 years with a 4-year extension upon Contractor’s request. In the event Contractor terminates the contract before completing the committed work programs. the contract shall be terminated. provided that the minimum requirements have been met. the outstanding commitments shall be payable to the government through BPMIGAS. Contractor shall perform committed work programs at the estimated amount as set out in the contract. ‰ Development  When the plan of development (POD) of the first field approved.  If no commercial discovery during the 10-year exploration period.

Basic Principles – Participating Interest ‰ Ownerships  The holder of undivided interests in each PSC may be more than one party. ‰ Assignment  Contractor may assign all or any part of its undivided interest to any affiliated company. then submit a notification to BPMIGAS. The Minister may require Contractor to prioritize the Indonesian national companies for the assignments to a non-affiliated company or to a non-party of the PSC.  Contractor may assign all or any part of its undivided interest to a non-affiliated company with the prior written consent of BPMIGAS. .35/2004. The majority interests cannot be assigned to a non-affiliated company during the first 3 years of exploration period. requires that the assignments to be approved by the Minister based on BPMIGAS evaluation.  Each interest holder in a PSC is legally a single entity. effective 14 October 2004.  Government Regulation No.

Contractor has no obligation to offer the 10% undivided interest.35/2004 spells out that the Indonesia Participant is a local government owned company.  National companies shall response to this offer within 60 days as from the date offering letter. the Contractor shall offer this participating interest to national companies.  Local companies shall response to this offer within 60 days as from the date of the offering letter. .  The Government Regulation No.  In the event no local company responses within 60 days.Basic Principles – Participating Interest ‰ First Field Development  Following the approval of the first plan of development (POD) Contractor is obligated to offer a ten percent (10%) undivided interests to an Indonesian Participant.  In the event no national company responses within the 60 days.

Taxation .A Prospect Lead-1 Lead-1 Lead Lead Implications: .Basic Principles . ‰ An interest holder is legally treated as a single entity.Consolidation .Ringfencing ‰ Each block (Contract Area) may be owned by several interest holders. a separate legal entity has to be established for each interest in each contract area.Unitization .Scope of Reporting . ‰ When an oil company holds ownerships in several contract areas.B Field-2 Field-2 Prospect-2 Prospect-2 Contract Area . Field-1 Field-1 Lead-2 Lead-2 Prospect-1 Lead-3 Lead-3 Contract Area .

Basic Principles – Ringfencing ‰ Refers to the previous slide  Contract area ‘A’ is reported separately from Contract area ‘B’  No consolidation with regards to revenue.  When the extent of a unitized field in the adjacent area is an open area.  Such a request is applicable if the extent of a unitized field remains an open area within 5 years as from the date of Contractor’s report regarding the unitized field. costs and taxation.  Field-2 lays in both contract areas represents a unitized field. subject to a unitization agreement between block ‘A’ and ‘B’. .  The Minister appoints the operator of unitized field based on the BPMIGAS evaluation. Contractor may request to the Minister through BPMIGAS to extend its contract area to cover the whole field.

 The appointment of an operator for a unitized field is normally based on techno-economic considerations.Basic Principles – Ringfencing ‰ Implications & Other Matters  Operating Costs to be to be recovered from production in the same contract area annually.  Costs incurred dedicated for several blocks are allocated to each block based on a method which is in accordance with generally accepted and recognized accounting sistems.  Profit/loss resulted from a contract area never be consolidated with profit/loss from any other contract areas. Each interest holder in a PSC files for income tax separately.  Production and costs of a unitized field to be allocated to each block typically based on estimated amounts of reserves. .

to measure the the field’s economic profile. ‰ The study. . ƒ Block-wise approach calculates the whole revenue & costs within the block. is proposed to BPMIGAS for approval. exploitation designs. to reflect the real calculation of the PSC. ‰ Major Economic Measurements: .Basic Principles – Ringfencing Field Development ‰ A Study of a field development is required to determine the scale. known as Plan of Development (PoD). and its economic forecast. Note:1st field requires Minister’s approval.Internal Rate of Return (IRR) .Government Take & Contractor Take .Pay Back period ‰ Stand-alone approach & block-wise approach: ƒ Stand-alone approach calculates the revenue & costs within the field.

Basic Principles – Typical Sharing Gross GrossRevenue Revenue First FirstTranche TranchePetroleum Petroleum Cost Cost Recovery Recovery Equity Equityto tobe beSplit Split CONTRACTOR CONTRACTOR Share Share BPMIGAS BPMIGAS Share Share DMO DMO DMOFee DMOFee Gov’t Gov’tTax Tax Net NetContractor Contractor Share Share Indonesia Indonesia Share Share .

-Drillings Drillings .-Interest Loan .Explor.G&G Studies G&G Studies . COSTS NON NONCAPITAL CAPITAL COST COST PRODUCTION PRODUCTION CAPITAL CAPITAL COST COST .-Community Devel Community Devel .Office Expenses . Administration .Explor.Public Relation Public Relation .-Gas Oil .Field Office. Services -&Field Office.-Utilities & Auxiliaies Utilities & Auxiliaies . Finance & Admin.-Personal Expenses Personal Expenses .COSTS COSTS GROSS GROSSREVENUE REVENUE PRICE PRICE LIFTING LIFTING COST COST RECOVERY RECOVERY Contractor ContractorShare Share Indonesia Share Indonesia Share Sharing Mechanism .-Engineering Services Engineering Services .-Gen. .Interest on Loan UNREC.Transportation Costs Transportation Costs .Home Office O/H Home on Office O/H . Administration OPERATING COSTS : PRIOR YEARS UNRECOV. Services General Admin & General Admin DEPRECIATION GENERAL GENERAL&& ADMINISTRATION ADMINISTRATION .Office Expenses Gen.Direct Prod Exp .Material Services Material Services .-Direct Direct Prod Exp Gas .Gas Processing Gas Processing .Oil DirectProd ProdExp Exp. UNREC.Basic Principles – Cost Structure EXPENDITURES EXPENDITURES: : EXPLORATION EXPLORATION&& DEVELOPMENT DEVELOPMENT .Finance & Admin.

Cost Structures ‰ Exploration & Development Expenditures: Exploratory and development studies & surveys. ‰ Cost of production facilities and other related capital items are classified as production expenditures. Development Development activities are normally related to developing oil and gas field.Tangible Costs of exploratory wells are treated as Non-Capital Costs.The terms ‘Tangible’ and ‘Intangible Costs’ are used for drilling activities.Intangible Costs are Non-Capital for both exploratory and devel wells. . exploratory & development drillings.Exploration & Development Activities Activities ‰ ‰ Exploration Exploration activities are normally related to efforts in searching for oil and gas reserves. and treated as Capital Costs. administrations (allocated and non-allocated).Tangible Costs of development wells are treated as Capital Costs. . . based on an approved Plan of Development (POD). Notes: . .

Intangible developmentdrilling. aerial. geophysical&& seismic seismicsurveys. Temporaryfacilities facilitiesused usedininexploration explorationand andpurchase purchaseofofG&G G&Ginf information.and andcore corehole holedrilling.topograp topographical. Exploratory : ExploratoryDrilling Drilling: Labor. Labor. drilling.including includingaccess accessroad roadand andcanal canals wells.materials materials&&services servicesused usedinindrilling drillingexploratory exploratorywells. drilling.geological.Exploration & Development – Cost Items Non NonCapital Capital Exploratory : ExploratorySurvey Survey: Labor.materials materials&&services servicesused usedininaerial. wells. geological. Development DevelopmentDrilling: Drilling: Intangible development s totowells. Other : OtherExploratory ExploratoryExpenditures Expenditures: Temporary ormation. surveys.well wellequipment equipmentsurface/subsurface surface/subsurface Miscellaneous Miscellaneouscapital capitalitems itemsdedicated dedicatedtotoexploration explorationand anddevelopment development . hical. Tubing. Administration Administrationallocable allocabletotoexploration explorationand anddevelopment development Capital Capital Tangible : Tangibledevelopment developmentdrilling drilling: Casing Casing&&Tubing. geophysical Labor.

lines.Development – Production Capital ‰ ‰ Construction ConstructionUtilities Utilities&&Auxiliaries Auxiliaries workshops. wellhead.warehouse. offshore platform. equipment equipment && instruments. . barges.Those classification relates to the ‘useful lives’ and ‘rate’ of depreciation. drilling. equipment. and miscellaneous equipment miscellaneous equipment Notes: .field fieldroads roads&&can canals ‰ ‰ Construction ConstructionHousing Housingand andWelfare Welfare housing. housing.Construction & Housing are normally built in the production phase. automotive. . tools. storage facilities. etc. drilling && production production tools. treating s and treatingplant plant && equipment. tangible development drilling. gas gas plant plants and steam system. jetties and andanchorages anchorages ‰ ‰ Movables Movables drilling rcraft. barges. and automotive. . aiaircraft. delivery lines. power. system. warehouse. instruments. delivery lines.etc. secondary secondary recovery recovery system. equipment. storage facilities. facilities. offshore platf orm. furniture furniture && office office equipment equipment. ‰ ‰ Production ProductionFacilities Facilities tangible development tation. waterfacilities. gathering gathering sstation.recreational recreationalfacilities. construction construction equipment. facilities. water als workshops. jetties steam system. flow flow lines. power. wellhead.

Direct Production Gas . secondary recovery operations. Capital Costs are classified as listed in Development Activities. transportation and delivery operations. Cost Structure ‰ ‰ Labor. repairs & maintenance. ‰ Production Supports (Field Office.Services .Direct Production Oil . handling.Utilities & Auxiliaries Operations . Production Operations: Production Supports: . materials (consumables) & services used in production activities are treated as Non-Capital Costs. etc.Gas Processing . field production facilities. Services and General Administration) relates to supporting activities dedicated to production.Production Administration . storage.Field Office .Production Activities Activities ‰ Production operations relates to well operations.

recoverable. Interest : InterestRecovery Recovery: Interest Interest on on loans loans may may be be recoverable. other expenses abroad.Details Detailsof offinancing financingplan planshall shallbe beincluded includedininannu annual WP&B. Automotive. relations. Equipment. dedicated for capital investment (typically for developin g rates.rental rentalofofheavy heavyengineering engineeringequipment. Overhead : OverheadAllocation/Home Allocation/HomeOffice Officecharges charges: Direct : identifiable Directcharges charges: identifiableto tocertain certainactivities activities Overhead : determined Overhead: determinedby byaadetailed detailedstudy studyapproved approvedby byBPMIGAS. al WP&B.Automotive.applied applied consistently and subject to review by BPMIGAS and Contractor. Technical Technical services services && related related services.Supporting Activities Non Non--capital capital Office : OfficeService Serviceand andGeneral GeneralAdministration Administration: General terial General Services Services incl. expenses. Capital Capital Furniture tal items . ma material services.site siterental rental&& other otherrentals rentalsof ofservices services&&property. services. property. .personnel personnelexpenses. incl. transportation. equipment. not not exceeding exceeding prevailing prevailing commercial commercial rates. facilities).transportation. BPMIGAS. Furniture&&Office OfficeEquipment. services.and andmiscellaneous miscellaneouscapi capital items.public publicrelations. dedicated for capital investment (typically for developing production production facilities). consistently and subject to review by BPMIGAS and Contractor.and and other expenses abroad.

it should be donated in the form of inkind. . ‰ Community Development falls within this category. ‰ Under normal operations. not in cash. ‰ Interest on Loans for Capital Investment is typically applicable to new field development with BPMIGAS approval. ‰ Overhead from Abroad is subject to cost ceiling. Total General & Administrative Costs represent less than 10% Total Expenditures. allocated to Oil and Gas Operations based on an equitable basis agreed by both parties.Supporting Activities Notes on General Administrative Expenditures : ‰ Costs fall into this category are mostly common support costs.

using estimated volume/amount (provisional) ‰ Imbalances are settled in cash (Cash Settlement) .Lifting & Sharing Analysis Total TotalLifting Lifting Contractor Entitlement Contractor Contractor Lifting Lifting BPMIGAS BPMIGAS Lifting Lifting BPMIGAS Entitlement Cost CostRecovery Recovery FTP FTPShare Share FTP FTPShare Share Equity EquityShare Share Equity EquityShare Share DMO DMO ‰ Entitlement calculated after the year ends (January-December) ‰ Lifting implemented during the year.

Joint Lifting: lifting using the same vessels/pipeline and destination. ‰ Actual entitlement is calculated after the year ends.Entitlement & Lifting ENTITLEMENT ‰ Contractor and BPMIGAS are annually entitled to a portion of oil & gas produced and sold from the block. The ` ` proceed is shared between BPMIGAS and Contractor based on provisional (estimated) entitlement. Individual Lifting: Each party lifts its own estimated entitlement based on provisional entitlement. . OVER/UNDER LIFTING Inbalances resulted from the difference between Lifting & Entitlement will be settled in cash (Cash Settlement). LIFTING ‰ Oil & gas produced and sold thru ‘joint lifting’ or ‘individual lifting’. when the variables are actual (Price. Lifting & Cost Recovery).

000 US$100 millions / US$40 2.139 2.500 Assumes: Lifting 5.8462% x 25% x 5.779 Contractor Share 721 DMO 361 TOTAL Government Entitlement: 1. (+) DMO 361 28.500 712 Equity to be Split 1. FTP Share: Cost Recovery 2.000 Contractor Entitlement: 1.000 bbl.861 1.8462% x 1.000 bbl Gov't Share 1. Cost Recovery FTP .20% 1.067 71. ICP $40/bbl Operating Costs $100 Millions 2. (-) DMO 361 28.Entitlement Calculation Calculation after the year ends Total Lifting 5.8462% x 25% x 5.000 bbl 2.500 288 28.000 bbl TOTAL 2.500 bbl 288 4.000 bbl 3. FTP Share: 712 71.861 Contractor Entitlement 2. Equity Share Government Entitlement 2.139 .8462% x 1.1538% x 1.500 bbl 3. Equity Share 433 28.1538% x 1.

3077 62.8462 26. .8182 42.7857 56% 56% 48% 48% 44% 44% 20.1538 71.0909 28.3077 46.7857 26.5455 79.5455 67.3077 67.8182 31.1818 57.Lifting & Sharing Notes on Government Tax of 44%. 48% and 56% STANDARD COMMON SPLITS NET NET SPLIT SPLIT GOV'T GOV'T TAX TAX GROSSED-UP GROSSED-UPSPLIT SPLIT BPMIGAS CONTRACTOR BPMIGAS CONTRACTOR 85/15 85/15 56% 56% 48% 48% 44% 44% 65.4545 32.1538 73.5714 65/35 65/35 70/30 70/30 Corporate Tax Branch Profit Tax (20% x 100%100%-30%) Corporate Tax Branch Profit Tax (20% x 100%100%-35%) Corporate Tax Branch Profit Tax (20% x 100%100%-45%) 30% 14% 44% 35% 13% 48% 45% 11% 56% Gross-Up Split for Contractor Net After Tax 15% Government Tax 44% Grossed-Up Tax 28.6923 32.8462% (15/52) NOTES: New PSCs require changes in sharing split when there is changes in Rates of Income Tax and Branch Profit Tax.6923 57.9091 71.8462 28.0909 34.4286 68.6923 53.2143 34.5000 62. to keep the same after tax share.5714 53.5000 56% 56% 48% 48% 44% 44% 31.4286 46.6923 37.1818 68.9091 65.3077 42.2143 73.5000 37.5000 79.4545 20.

0000% 7.0000% Cost Recovery 50.000. (42. (40.000 barrels.2115% (7.594.000 barrel dan Kontraktor 50.2116% Domestic Market Obligation (DMO) TOTAL BPMIGAS CONTRACTOR PROVISIONAL ENTITLEMENT 14.00 Estimated Operating Costs-Oil during the year : US$20. then BPMIGAS portion is US$1.000 x 35.000.497.8462% (85/15): Estimated Lifting during the year : 1.400.0000% 21.3461% 8. therefore BPMIGAS portion would be US$1.000 x 35.000 barrel.2308% - 5. .0000% 42.0000% Equity to be Split 30.00/barrel. BPMIGAS (through its appointed seller) nominates 40.00).7692% 50.00) Individual Lifting: If the crude oil available for lifting in January is estimated to be 100.Lifting & Sharing Crude Oil Share split : 71. TOTAL First Tranche Petroleum (FTP) 20.2115%) 100.1538% dan 28.7884% x 100.6539% 0. If crude oil price is US$35. Due to operational matters.000 barrels at US$35.000 barrel @ US$40.00/barrel.788 barrel. then BPMIGAS nominates + 42.0000% Joint Lifting : If crude oil delivered to a refinery in January is 100.000.7884% 57.000.

403. (7.Lifting & Sharing Crude Oil – DMO Fee BPMIGAS portion includes Domestic Market Obligation (DMO) supplied by Contractor. The amount of DMO Fee payable to Contractor is : ‰ If the crude oil classified as ‘New Oil’ (crude oil produced within the first 60 months since commencement of production). (crude oil produced following the first 60 months since commencement of production). adjustment required to be aligned with PSC. then the DMO Fee payable to contractor is US$252. In December.240. ‰ If the crude oil classified as ‘Old Oil’.2115% x 100.000 barrels x US$3. (7.00). .000 barrels x US$35.2115% x 100. the DMO Fee is US$25. Let’s say the DMO Fee per barrel is 10%.50). then the DMO Fee payable to contractor per barrel refers to the Contract.

00 per mmscf. Notes: .No DMO Gas (refers to the existing gas producing PSC) .000.6923% 13.3077% 100.1538% x 100.Lifting & Sharing Gas Share split 42.4615% - 11.0000% Equity to be Split 30.8462% TOTAL BPMIGAS CONTRACTOR PROVISIONAL ENTITLEMENT 8.6923% (70/30): Estimated Lifting during the year : 1.000. TOTAL First Tranche Petroleum (FTP) 20.0000% 12. then BPMIGAS portion is US$42.00 per mmscf.000.0000% Cost Recovery 50.000 mmscf @ US$2.3077% dan 57. Estimated Operating Costs-Gas during the year : US$1.0000% 21.3077 (21.1538% 78.000 mmscf at US$2.5385% 50.00).000 x 2.0000% Joint Lifting: If during a month total gas delivered is 100.Simplified calculation .

-55 “C” LNG LNG Plant Plant LNG LNG Buyer Buyer Sales Sales Agreement Agreement.Administrative Costs LNG LNG Plant Plant LNG LNG Buyer Buyer Sales Sales Agreement Agreement. LNG Costs: .Lifting & Sharing Typical Gross Revenue of LNG PSC Block Field Field.Debt Service .-33 PSC Block Field Field.Transportation Costs .-22 Gross Revenue Netback Value of each Sales Contract is allocated to each PSC typically is based on contribution of supply (producer’s %) .-22 Field Field.-44 “B” Netback Value : (a – b) a.-11 PSC “A” Block Field Field.-11 Field Field. Sales Proceeds b.Processing Costs .

. . . . . .Administration Costs US$ 20 millions 3 millions 5 millions 2 millions Total LNG Costs . US$ 30 millions (50% x US$120 millions) . . . . . . . US$150 millions LNG Costs: .PSC Block “A” . . . . . . . .PSC Block “B” . . . . . . . . . . .Transportation Costs . . .00) . . . . . . . . . .Lifting & Sharing Gross Revenue LNG of each PSC (from previous slide for Sales Agreement – 1) : Sales Proceeds 10 cargo (3 millions of mmbtu @ US$5.PSC Block “C” US$ 60 millions (25% x US$120 millions) . . US$ 30 millions (25% x US$120 millions) . . . . . . .Debt Service . . . . . . . . . . . . . . US$ 30 millions Netback Value . . . . US$120 millions Gross Revenue: . . . .Procesing Costs . . . . .

Lower Cost Recovery inkind (barrel/mcf/btu/mt) . lower for Contractor 2. Higher lifting results in: .FTP and DMO*) remain the same .Higher BPMIGAS entitlement percentage.FTP and DMO*) remain the same .Higher Cost Recovery in bbl / mcf / btu .Lifting & Sharing Variable Sharing Analysis Assuming other variables were constant.Lower BPMIGAS entitlement percentage.Higher Revenue .Higher Equity Split for Pertamina & Contractor . Higher cost recovery results in: . higher for Contractor *) when Gross Revenue > (FTP+Cost Recovery) . Higher price results in: .Lower Equity Split for Pertamina & Contractor .Higher Revenue .Higher Equity Split for BPMIGAS & Contractor . then: then 1.Lower Cost Recovery in bbl / mcf / btu .Higher BPMIGAS entitlement percentage.FTP and DMO*) remain the same . lower for Contractor 3.

Widuri.50 GAS (Nature : typically a gas field developed after the market has been determined. Cinta.Lifting & Sharing Pricing : (Current Policy wap of 12 previous months) CRUDE OIL (Nature : develop the field then find the market) QUOTED CRUDES : SLC. Duri Current ICP Formula : 20% APPI + 40% Platt’s + 40% RIM UNQUOTED CRUDES : related to a Quoted Crude Example : Bula = Duri .LNG Price formula mostly relates to crude oil export price . the development often involves external financing) .$0. Attaka.Pricing varies (‘negotiable’. economically feasible) . Arjuna.Long-term contract . Senipah.

-nn FIELD FIELD 5 FIELD 6 FIELD FIELD -5 -6 FIELD FIELD-1-1 LIFTING CRUDE -2 CRUDE-2 FIELD FIELD.They are grouped as per type of crude FIELD FIELD.Production may be from more than one different fields .-22 FIELD FIELD.Lifting & Sharing Production & Lifting .-44 CRUDE -1 CRUDE-1 FIELD .Oil .-33 LIFTING .

-77 FIELD .-55 .-22 FIELD FIELD.FIELD FIELDFIELD FIELD -66 FIELD FIELD-1-1 JOINT LIFTING Sales Sales Agreement Agreement 22 FIELD FIELD.-33 JOINT LIFTING .Gas .-44 Dedicated reserves FIELD .Production may be from several different fields and blocks . calculated as per PSC block Dedicated reserves Sales Sales Agreement Agreement 11 FIELD FIELD.Grouped as per sales agreement.Lifting & Sharing Production & Lifting .

-Direct Direct Prod Exp Gas . Administration .G&G Studies G&G Studies .Office Expenses Gen. Services -&Field Office. Administration OPERATING COSTS : PRIOR YEARS UNRECOV. Finance & Admin.-Drillings Drillings .Explor.Gas Processing Gas Processing . .-Engineering Services Engineering Services .COSTS COSTS GROSS GROSSREVENUE REVENUE PRICE PRICE LIFTING LIFTING COST COST RECOVERY RECOVERY Contractor ContractorShare Share Indonesia Share Indonesia Share Sharing Mechanism . Services General Admin & General Admin DEPRECIATION GENERAL GENERAL&& ADMINISTRATION ADMINISTRATION .Field Office.Material Services Material Services .Public Relation Public Relation .Lifting & Sharing Cost Recovery EXPENDITURES EXPENDITURES: : EXPLORATION EXPLORATION&& DEVELOPMENT DEVELOPMENT .-Community Devel Community Devel .Transportation Costs Transportation Costs .-Personal Expenses Personal Expenses .Oil DirectProd ProdExp Exp.Finance & Admin.-Interest Loan .Home Office O/H Home on Office O/H .-Gas Oil .Interest on Loan UNREC.Explor.Direct Prod Exp .Office Expenses .-Gen. UNREC. COSTS NON NONCAPITAL CAPITAL COST COST PRODUCTION PRODUCTION CAPITAL CAPITAL COST COST .-Utilities & Auxiliaies Utilities & Auxiliaies .

‰ . --ItItstarts startsrendering renderingservices servicesaccording accordingto toits itsfunction. . partiallyor orwholly. wholly. For Forexamples: examples: --aawell . ‰ placed into ” (PIS) ‰ An Anasset assetisisconsidered consideredas as““placed intoservice service” (PIS)when: when: --ItIt’s ’s been . --aastorage storagetank tankisisconsidered consideredas asPIS PISwhen whenititstarts startsreceiving receivingcrude crudeoil oil totobe bestored.it. stored. function. --an anoffloading offloadingequipment equipment/ /facilities facilitiesisisconsidered consideredas asPIS PISwhen whenititstarts starts being ulitized for lifting operations .Other Accounting Procedures Costs Charging ‰ ‰ Capital Capital expenditures expenditures are are charged charged through through depreciation depreciation beginning beginning inin the the year ”. being ulitized for lifting operations. wellisisconsidered consideredas asPIS PISwhen whenititstarts startsproducing producing. ‰ Non Noncapital capitalexpenditures expendituresare arecharged chargedwhen whenthey theyincur incur. yearwhen whenthe thecorresponding correspondingassets assetsare are“placed “placedinto intoservice service”. --aawellhead wellheadplatform platformisisconsidered consideredas asPIS PISwhen whenititstarts startsbeing beingutilized utilized for forplacing placingwellheads wellheadson onit. partially beencompleted completed.

not. IfIfproduction productionof ofeither eithergas gasor oroil oilhas hascommenced commencedwhile whileother otherhas hasnot. Common CommonSupport SupportCosts Costs--indirectly indirectlyrelated relatedtotoboth bothoil oiland andgas gasoperations operations allocated allocatedbased basedon onequitable equitablebasis basisagreed agreedby byboth bothparties parties Recovery Recoveryof ofGas GasCost Costout outof ofOil OilRevenue Revenue(vice (viceversa): versa): 1. Oil OilCosts Costs––directly directlyrelated relatedtotooil oiloperations operations 2. 3. 2. 2. 2. costs. Gas GasCosts Costs––directly directlyrelated relatedto togas gasoperation operation 3. 1. 1. versa).Other Accounting Procedures Oil & Gas Allocation and Chargings 1. . 4.the theexcess excessshall shallbe berecovered recoveredfrom from oil oil revenues revenues(vice (viceversa).costs costs allocated allocatedininan anequitable equitablemanner. Common CommonCosts Costs––directly directlyrelated relatedtotoboth bothoil oiland andgas gasoperations operations allocated allocatedbased basedon onrelative relativerevenue revenue 4. the the natural natural gas gas revenues revenues do do not not permit permitfull fullrecovery recoveryof ofnatural naturalgas gascosts. manner. IfIf after after commencement commencement of of production. production.

5 7.0 5.0years years Group Group22 5.0years years Group Group22 5.0years years Group Group11 3.0 20.0 10.0 6.0 10.0years years Group Group22 .0years years Group Group33 7.-Full Fullyear yeardepreciation depreciation .5years years 3.0 3.0years years 10. .0 4.0 15.0years years 8. Method.0years years 6.0years years Group Group11 4.-Group 3 : 10% Group 3 : 10% Group Group11: : Automobiles Automobiles Light LightTrucks Trucksand andTractor TractorUnits Units Heavy Trucks Heavy Trucks Buses Buses Aircraft Aircraft Construction ConstructionEquipment Equipment Furniture & Office Furniture & OfficeEquipment Equipment Oil Gas Oil&& Gas Gas Gas<7years <7years Reserves Reserves>>77years years 1.0 5.0 3.0years years 6.0years years 8.-Group Group11: :50% 50% .5years years 15.0 8.0years years Group Group22 Group Group22: : Construction ConstructionUtilities Utilities&&Auxiliaries Auxiliaries Construction Housing & Construction Housing &Welfare Welfare Production ProductionFacilities Facilities Railroad cars Railroad cars&&Locomotives Locomotives Water Transportation Water Transportation Drilling Drilling&&Production ProductionTools Tools 5.0years years 8.0years years 20.5 4.0years years Group Group11 2.5 1.-Declining DecliningBalance BalanceMethod.Other Accounting Procedures Typical Depreciation Table .0 6.0 9.0years years 18.0years years Group Group33 5.0 3.0 18.0years years Group Group22 3.0years years 4.0 5.0 8.0years years 6.0 5.0years years Group Group33 9.-Depreciation Depreciationfactor factor .5years years 3.0 6.0years years Group Group33 10.0 8.0 2.0 3.-Group Group22: :25% 25% .

abroad. ‰ ‰ All AllTSAs TSAsproposed proposedannualy annualytotosupport supportactivities activitiesproposed proposedduring duringthe theyear. 8 & 11. ‰ ‰ TSA TSAisisaatemporary temporaryaccount accounttotobe beallocated allocatedtotoeach eachprojects. jobs. 8. 11 and summarized in Budget Schedule ScheduleNo No17. . planning.Budget Other Preparation Accounting – Other Procedures Schedules Substance Substanceof ofTSA TSA ‰ ‰ TSA TSA means means all all technical technical services services from from home home office office or or affiliates. year. costs). ‰ ‰ No No inhouse inhouse personnel personnel nor nor available available domestic domestic consulting consulting company company capable capable toto perform performthe thejobs. projects. ‰ ’s (as ‰ Competitive Competitivecharges chargestotodomestic domesticthird thirdparty party’s (asan anagent). 11 and summarized in Bud get Attachment to Budget Schedules No 4. Attachment to Reports No 4. 17. considered considered as as inter -company billings inter-company billings(at (atcosts). 8 & 11. ‰ ” provided ‰ The The actual actual figures figures are are reported reported inin colum colum ‘Corporate ‘Corporate Assistant Assistant” provided inin the the Attachment to Reports No 4. 8. ‰ ‰ Included Includedininthe theapproved approvedbudget budgetand andbe berequested requestedby bythe theoperator operatorininIndonesia. ‰ ‰ No Nooverlap overlapnor nordouble doublecharges chargestotooverhead overheadfrom fromabroad. jobs. agent). Requirement Requirementfor forTSA TSA ‰ -routine or ‰ TSA TSAisisnon non-routine orextraordinary extraordinaryjobs. ‰ ‰ Upstream Upstreamjobs jobsrelating relatingtotothe theIndonesian Indonesianproject projectplanning. Indonesia. affiliates. ‰ ” provided ‰ The Theestimated estimatedcosts costsare arepresented presentedinincolum colum‘Corporate ‘CorporateAssistant Assistant” providedininthe the Attachment to Budget Schedules No 4.

. . .”. Somenew newcontracts contracts: :all allFTP FTPgoes goestotoBPMIGAS BPMIGAS. .Such SuchFirst FirstTranche TranchePetroleum Petroleumshall shallbe besh shared between BPMIGAS BPMIGASand andCONTRACTOR CONTRACTORin inaccordance accordancewith withsharing sharingsplits splits.. .Fiscal Terms First Tranche Petroleum STANDARD STANDARDCLAUSE CLAUSE: : ““.normal normaloperation operationmeans means: : Gross GrossRevenue Revenue>>(FTP (FTP++Investment InvestmentCredit Credit++Operating OperatingCosts) Costs) Some . context.. .-FTP has no impact when financial FTP has no impact when financialoperation operationruns runsnormally*) normally*) . ... .” KEY KEYWORDS WORDS: : before beforeany anydeduction deduction shall be shared shall be sharedbetween betweenBPMIGAS BPMIGASand andCONTRACTOR CONTRACTOR FTP FTPDIFFERS DIFFERSFROM FROMROYALTY ROYALTY: : .-FTP FTPisisshared sharedbetween betweenthe theParties Parties .-FTP is merely to safeguard the minimum income of wner FTP is merely to safeguard the minimum income ofthe theproperty propertyoowner *)*)In Inthis thiscontext. . .. ..the ar twenty theParties Partiesshall shallbe beentitled entitledto totake takeand andreceive receiveeach eachYe Year twentypercent percent of all Petroleum produced and saved and not used in Petroleum Op erations of all Petroleum produced and saved and not used in Petroleum Operationsin in such Year before any deduction for the recovery of Investment Cr edit and such Year before any deduction for the recovery of Investment Credit and Operating ared between OperatingCosts Costs.

Fiscal Terms
Case on FTP
PRODUCTION SHARING CONTRACT - Conventional
Operating Costs
1
2
3
4
5
6
7
8

Lifting - mbbl
Price per bbl - $/bbl
Gross Revenue
First Tranche Petroleum
Gross Revenue after FTP
Investment Credit
Cost Recovery
Equity To Be Split

CONTRACTOR SHARE:
FTP Share
Equity Share
DMO
D M O Fee (New Oil)
Taxable Share
10 Gov't Tax Entitlement
11 Net Contractor Share
12 Total Share

US Dollars

10,000

10,000

20,000

20,000

with FTP

No FTP

with FTP

No FTP

1,000
20.00
20,000
4,000
16,000
500
10,000
5,500

1,000
20.00
20,000
0
20,000
500
10,000
9,500

1,000
20.00
20,000
4,000
16,000
0
16,000
0

1,000
20.00
20,000
0
20,000
0
20,000
0

1,154
1,587
1,442
(1,442)
3,240
(1,555)
1,685
11,685

0
2,740
1,442
(1,442)
3,240
(1,555)
1,685
11,685

1,154
0
0
0
0
0
1,154
17,154

0
0
0
0
0
0
0
20,000

9

13 Unrecovered Costs
14 Indonesia Share

0

0

4,000

0

8,315

8,315

2,846

0

Fiscal Terms
Investment Credit
STANDARD
STANDARDCLAUSE
CLAUSE: :
“Contractor
“Contractor may
may recover
recover an
an investment
investment credit
credit amounting
amounting toto 17%
17% ofof the
the capital
capital
investment
costs
directly
required
for
developing
Crude
Oil
production
facilities
.
investment costs directly required for developing Crude Oil production facilities .. .. .ofof
each
ing
each new
new field
field out
out ofof deduction
deduction from
from gross
gross production
production before
before recovering
recovering operat
operating
costs,
costs,commencing
commencingininthe
theearliest
earliestproduction
productionYear
Yearor
orYears
Yearsbefore
beforetax
taxdeduction
deduction(to
(to
be
paid
in
advance
in
such
production
Year
when
taken
).
be paid in advance in such production Year when taken).
The
The Investment
Investment Credit
Credit may
may be
be applied
applied toto new
new secondary
secondary recovery
recovery and
and tertiary
tertiary
recovery
EOR
projects
but
is
not
applicable
to

interim
production
schemes

or
further
recovery EOR projects but is not applicable to “interim production schemes” or further
investment
investment toto enhance
enhance production
production and
and reservoir
reservoir drainage
drainage inin excess
excess ofof what
what was
was
contemplated
in
the
original
project
as
approved
by
PERTAMINA

.
contemplated in the original project as approved by PERTAMINA”.
KEY
KEYWORDS
WORDS: :
••capital
capitalinvestment
investmentcosts
costs
••developing
Crude
Oil
)
developing Crude Oilproduction
productionfacilities
facilities(now
(nowititisisapplicable
applicabletotogas
gas)
••each
eachnew
newfield
field
••commencing
commencingininthe
theearliest
earliestYear
Yearor
orYears
Years
••totobe
bepaid
paidininadvance
advanceininsuch
suchproduction
productionYear
Yearwhen
whentaken
taken
••new
newsecondary
secondaryrecovery
recoveryand
andtertiary
tertiaryrecovery
recoveryEOR
EORprojects
projects
••not
applicable
to
interim
production
schemes
or
further
not applicable to interim production schemes or furtherinvestment
investment

Fiscal Terms
Case on Investment Credit
Operating Costs
1
2
3
4
5
6
7
8
9

Lifting - mbbl
Price per bbl - $/bbl
Gross Revenue
First Tranche Petroleum
Gross Revenue after FTP
Investment Credit
Cost Recovery
Total Recoverables
Equity To Be Split

10 CONTRACTOR SHARE :
FTP Share
Equity Share
DMO
D M O Fee (New Oil)
Taxable Share
11 Gov't Tax Entitlement
12 Net Contractor Share
13 Total Contractor Share
14 Unrecovered Costs
15 Indonesia Share

10,000
No I/C
1,000
20.00
20,000
4,000
16,000
0
10,000
10,000
6,000
1,154
1,731
0
0
2,885
(1,385)
1,500
11,500
0
8,500

10,000
with I/C
1,000
20.00
20,000
4,000
16,000
2,000
10,000
12,000
4,000
1,154
1,154
1,442
(1,442)
4,308
(2,068)
240
12,240
0
7,760

20,000
No I/C
1,000
20.00
20,000
4,000
16,000
0
16,000
16,000
0
1,154
0
0
0
0
0
1,154
17,154
4,000
2,846

20,000
with I/C *)
1,000
20.00
20,000
4,000
16,000
100
15,900
16,000
0
1,154
0
0
0
100
(48)
1,106
17,106
4,100
2,894

*) Inv.Credit is partially claimed starting in the first years of production

3.3.8462% = 72 (iii) 250 MBBL X 28.250 1.250 1.000MBBL MBBL 1.000 MBBL X 25% = 250 MBBL lower (ii) 1.8462% 28. .1.1.250MBOD MBOD Contractor ContractorSplit Split28.000 MBBL X 25% = 250 MBBL lower (iii) 250 MBBL X 28. commences. .250 == 800 800MBBL MBBL higher higher (ii) 1.000 1.8462% = 72MBBL MBBL Domestic Market Obligation .1 (Equity to be Split & FTP) for each Year as follows : (Equity to be Split & FTP) for each Year as follows : (I) (I) Production/Lifting Production/Lifting XX ΣΣNational NationalSupply Supply ΣΣNational NationalProduction Production (ii) (ii) 25% 25%Production Production (iii) The lower -up Split (iii) The lowerunder under(i) (i)or or(ii) (ii) XX Grossed Grossed-up Split EXAMPLE EXAMPLE: : Production/Lifting Production/Lifting ΣΣNational NationalSupply Supply ΣΣNational Production National Production 1.000MBBL MBBL XX1. .Fiscal Terms Domestic Market Obligation STANDARD STANDARDCLAUSE CLAUSE: : after after commercial commercial production production commences.000 1.1 6.3and and6.000 MBOD 1. .3 6.000/ /1. . Contractor Contractor agree agree toto sell sell and and deliver deliver aa portion nt totoSection portionofofthe theshare shareofofCrude Crudeoil oiltotowhich whichititisisentitled entitledpursua pursuant Section6.000 1.8462% (I) (I) 1. .000 MBOD 1.

when changes in lifting. . when changes in lifting. deficiency.20 $0.Fiscal Terms Notes on Domestic Market Obligation ‰ ‰IfIfGross GrossRevenue Revenue>>(FTP (FTP++Investment InvestmentCredit Credit++Cost CostRecovery).20/ /barrel barrelfor forfield fieldstarts startsproducing producingprior priortoto23 23February February1989 1989 .-shall shallbe bethe themaximum. then then Contractor Contractorshall shallbe berelieved relievedfrom fromthe theobligation.-$0.-10% or 15% or 25% of Price / barrel according to the contract 10% or 15% or 25% of Price / barrel according to the contract ‰ flect annual ‰DMO DMOFees Feesare arebilled billedmonthly. maximum. obligation. ‰ ‰DMO DMOFee Fee . price and cost Fluctuate percentage. ‰ ‰Quantity Quantitytotobe besupplied suppliedduring duringthe theyear year . Recoverables). when Gross Constant percentage. monthly. . Recovery). Recoverables). when GrossRevenue Revenue>>(FTP (FTP++Cost CostRecoverables).no nocarry carryover overfor forany anydeficiency.adjustments adjustmentsmay maybe benecessary necessarytotore reflect annual PSC calculation PSC calculation .-Fluctuate percentage.-Constant percentage. price and costrecovery recoveryaffect affect Gross GrossRevenue Revenuetotobecome becomeless lessthan than(FTP (FTP++Cost CostRecoverables).

000 20.00 1.MUS$ 25.000 23.mbbl Cost Recovery .FTP Share .000 18.Equity Share Total DMO (normal) DMO Delivered ACTUAL 20.MUS$ Gross Revenue .000 mbbl ACTUAL 23.000 200 800 0 1.000 18.000 18.000 mbbl Total Lifting FTP Cost Recovery Equity to be Split Contractor Share: .000 25.00 1.000 mbbl 1.000 200 783 17 58 23 81 72 72 58 0 58 72 0 58 5 63 72 63 .00 1.000 200 720 80 1.Fiscal Terms Case on Domestic Market Obligation BUDGET Price/bbl Total Lifting .

8 Financial Report Year .Introduction to Budgeting & Reporting Annual Contents Year .9 Year .10 Field Field––11Production ProductionOperations Operations Field Field––22Production ProductionOperations Operations Activities Activitiesfor forField FieldDevelopment DevelopmentProjects Projects(POD/AFE) (POD/AFE) Activities Activitiesfor forExplorations Explorations&&Other OtherProjects Projects(AFE) (AFE) Activities Activitiesfor forRoutines Routines Annual Budget (Part of WP&B) .

including sharing of production.Budgeting & Reporting Annual Budget & Financial Report ‰ Financial Control starts from Financial Reporting. presented quarterly for monitoring & controlling purposes. . ƒ Financial Report Reporting the actual figures of all activities approved in the Annual Budget (WP&B). presented mostly in a currency unit (US Dollars). ‰ Financial Reporting captures all activities in each contract area during reporting periods. ‰ Main Financial Reporting : ƒ Annual Budget Part of Work Program and Budget (WP&B) itemizing planned activities during the year.

Budgeting Budgeting & & Reporting Reporting ‰ Contents Budget Year Overview summarizes forecast activities during the budget year. development. Revisions on the WP&B should be submitted to BPMIGAS in the mid budget year (no later than August). ‰ Submissions. at least 3 months prior to the beginning of each calendar year. ‰ Revisions/Changes BPMIGAS may propose a revision within 30 days after receipt. provided they do not change the general objective nor increase the approve expenditures. exploitation and supporting activities. In the event of emergency requiring immediate actions. and costs incurred included as operating costs. Maps and other supporting documents are to be attached as appropriate. Details of work program may be changed. or at such other time as agreed by the parties. Annual Work Program provides technical descriptions of proposed exploratory. . Areas subject to considerable variation should be discussed in the overview together with the possible impact. proper actions may be taken.

source of reference for actual data. cost recovery. ‰ Legal permanent document. . except for Report 16 and project control reports 18 to 26 should be rounded off to the nearest US dollar amount. ‰ Explains variances. rounded off to the nearest thousand dollars. ‰ Expressed in US dollars. For the 4th quarter Report.Budgeting Budgeting & & Reporting Reporting The actual figures of expenditures estimated in the Work Program & Budget are reported in Financial Report: ‰ The summary of quarterly expenditures. sharing of production & others based on actuals. operating costs. In the next succeeding quarterly reports the adjustment to convert estimated to actuals should be made in ‘This Quarter’ figures. ‰ Submitted to BPMIGAS not later than 20th calendar day after quarter-end. provided that it exceeds US$500.000. it will be necessary to submit the corrected report not later than the following 1st of March. generally when YTD variance is + 10% or more. ‰ Inclusion of estimated expenditures for the third month of any quarter.

-Other OtherReports Reports PSC PSCFinancial Financial Reporting ReportingItems Items variance PSC requires to meet: .-Balance BalanceSheet Sheet .-Income Statement Income Statement .modern petroleum industry practices and procedures .generally accepted and recognized accounting systems .Budgeting & Reporting Budget & Financial Report Actual Actual (General (GeneralLedger) Ledger) Estimates Estimates similar structures Financial Financial Items Items BUDGET BUDGET Financial Financial Items Items (Part (Partof ofWP&B) WP&B) FINANCIAL FINANCIAL REPORT REPORT .

. ‰ Books and Reports will be maintained and prepared in accordance with methods established by BPMIGAS. ‰ The chart of accounts and related definitions will be prescribed by BPMIGAS. PSC Exhibit ‘C’ “Accounting Procedure” ‰ Accounting Records and books will be kept in accordance with generally accepted and recognized accounting systems. … ‰ BPMIGAS may at its option delegate to CONTRACTOR its obligation to keep books and accounts. consistent with modern petroleum industry practices and procedures.Budgeting & Reporting Reporting Requirement PSC Section “Books and Account and Audit” ‰ BPMIGAS shall be responsible for keeping complete books and accounts with the assistance of CONTRACTOR reflecting all Operating Costs as well as monies received from the sale of Crude Oil and Natural Gas.

Budgeting & Reporting Complete Sets of Budget & Financial Report BBUUDDGGEETT Schedule Schedule 11 Schedule Schedule 22 Schedule Schedule 33 Schedule Schedule 3A 3A Schedule 4 Schedule 4 *)*) Schedule Schedule 55 Schedule Schedule 66 Schedule Schedule 77 Schedule Schedule 88 *)*) Schedule Schedule 99 Schedule Schedule10 10 Schedule 11 Schedule 11 *)*) Schedule Schedule12 12 Schedule 13 Schedule 13 Schedule Schedule14 14 Schedule 15 Schedule 15 Schedule Schedule16 16 Schedule 17 Schedule 17 RREEPPOORRTT Report Report 11 Report Report 22 DESCRIPTION DESCRIPTION Financial FinancialStatus StatusReport Report Key Operating Statistics Key Operating Statistics Expense Expenseand andExpenditures ExpendituresSummary Summary Report 3 Expenditures Summary Report 3 Expenditures Summary Report 4 *) Exploration Report 4 *) Explorationand andDevelopment DevelopmentExpenditures Expenditures Exploratory Drilling Capital & Operating Exploratory Drilling Capital & OperatingExpenditure Expenditure Development DevelopmentDrilling DrillingCapital Capital&&Operating OperatingExpenditure Expenditure Miscellaneous Exploratory Capital Expenditures Miscellaneous Exploratory Capital Expenditures Report 8 *) Production Report 8 *) ProductionExpense ExpenseSummary Summary Production Facilities Capital Production Facilities CapitalExpenditures Expenditures Miscellaneous MiscellaneousFacilities FacilitiesCapital CapitalExpenditures Expenditures Report 11 *) Administrative Expense Summary Report 11 *) Administrative Expense Summary Miscellaneous MiscellaneousAdministrative AdministrativeCapital CapitalExpenditures Expenditures Capital Assets to be Placed into Service Capital Assets to be Placed into Service Report Depreciation Report 14 14 DepreciationSchedule Schedule Report 15 Detailed Project Report 15 Detailed ProjectSupport SupportListing/Project Listing/ProjectStatus StatusReport Report Report 16 Lifting Forecast/Lifting Share Analysis Report 16 Lifting Forecast/Lifting Share Analysis Expenditures ExpendituresSummary Summaryby byCategory Category *) Includes Attachment .

Budgeting & Reporting Budgeting & Reporting Summarized ‰ WP&B is a means to control activities. FR is still relevant especially during the contract years. any changes requires approved journal entries. . ‰ When the reporting period is passed. ‰ When the budget year is passed. expenditures and revenues to achieve approved targets and goals. ‰ FR is used for use of internal and external relevant institutions. ‰ WP&B is used internally for the purpose of running and fine-tuning the journey of the business during the budget year. therefore. the 4th quarter report represents final annual actual figures. ‰ FR is a permanent legal document. WP&B becomes irrelevant. ‰ Financial audits starts from Financial Report. ‰ Financial Report (FR) is the actual figures of WP&B presented quarterly. the users of WP&B are BPMIGAS and Contractor including its partners.

3 Expenditures Expenditures Summary Summary Sch. 8 Production Production Expense Expense Sch. 1 Lifting Lifting . 14 Depreciation Depreciation • Gross Revenue • Cost Recovery • Contractor Share • Indonesia Share Sch. 11 General General&& Administrative Administrative Sch.Budget Preparation Main Budget Schedules Sch. 16 Financial Financial Status Status Sch. 4 Exploration Exploration&& Development Development Sch.

Attachment Attachment Sch.Capital Sch.YearExpd. Gen.13 Assets AssetsPIS PIS Sch.Summary Sch. Exp.3.14 Sch.Capital Sch.&Adm.1 Financial FinancialStatus Status Sch.12 Misc.Drilling Devl.Budget Preparation Data Flows in Budget Schedules Sch.17 Bgt.4 Expl.8 Prod.3A 3A Expd.8 Sch.3.&&Dev.16 Lifting Lifting .9 Sch.Capital Sch.Year Bgt.Drilling Misc.13 Sch. Dev. Sch.1 Sch.Capital Misc. Sch.Capital Expl.10 Facilities Cap Misc.17 Sch.5 Sch.11 Gen.7 Sch.4 Sch.2 Sch.&Adm. Sch.6 Sch. Attachment Sch.Drilling Devl.6 Sch.16 Sch. Prod.Summary Expd.Exp.5 Sch. Expd.14 Depreciation Depreciation Sch.12 Sch.Drilling Misc.15 Project ProjectList List Sch.Capital Misc.11 Sch.7 Expl.15 Sch.10 Sch.2 Statistics Statistics Sch. Expl.

Budget Preparation Developing Budget Step – 1 : Identify planned activities as routines & projects Step – 2 : Posting Exploration & Development Expenditures Step – 3 : Posting Production Expenditures Step – 4 : Posting General & Administration Expenditures Step – 5 : Classifying Assets Placed Into Service and Depreciation Step – 6 : Summarizing Expenditures & Operating Costs Step – 7 : Matching Operating Costs to Lifting Value Step – 8 : Completing Other Schedules .

Exploration Programs .Other Projects BUDGET SCHEDULE No 4.Eng & Material Services .Anticipated Changes Projects (AFE Required) .General Office Expenses BUDGET SCHEDULE No 15 • Geological & Geophysical (G&G) • Exploration Drilling • Development Drilling • G & G Capital • Misc.Field Office.Estimates of routine activities .Community Development .Other Production .Geological & Geophysical (G&G) .Plan of Development .Anticipated Activities . 8 & 11 Exploration & Development . Expl & Devl Capital • Production Facilities • Misc.Production Operations .Personnel Expenses .Administration .Transportation . Services & Gen.Admin General Administration .Finance & Administration .Budget Preparation Step -1 : Projects & Routine Identification Routine/Non-Projects Activities .Public Relation . Production Facilities • Administrative Capital • TSA (Allocated to projects) (BS#4) (BS#5) (BS#6) (BS#7) (BS#7) (BS#9) (BS#10) (BS#12) .

000 62.000 9) ANTICIPATED EXPENDITURES AS OF 31/12/2005 Page 1 of 3 NON .Office Equipment .000 2.000 11.000 10.500 10.Exploratory Drilling .Production Facilities .000 0 4.000 25.000 3.000 18.500 100.000 25.000 0 2.Development Drilling Production .500 100.000 4.000 9.000 12.000 5.Budget Preparation – Lists of Projects Budget Schedule – 15 List of Projects (AFE is required for each project) OPERATOR CONTRACT AREA BUDGET YEAR BPMIGAS PRODUCTION SHARING CONTRACT DETAILED PROGRAM SUPPORT LISTING : : : 2006 1) Line 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 DESCRIPTION Exploration & Development . no Intangible Drilling Costs given 25.000 100.000 25.000 To simplify the illustrations.000 4.500 25.000 0 4.000 12.000 50.000 4.000 18.000 50.000 37.000 32.000 0 4.000 50.Furniture 2) 3) NEW OLD TOTAL PROGRAMS PROGRAMS PROGRAMS 1) ANTICIPATED EXPENDITURES AS OF 31/12/2005 SCHEDULE 15 -BS- CAPITAL PORTION BUDGETED 7) EXPENDITURES 5) 6) TOTAL CURRENT FUTURE YEAR YEARS 8) TO BE PLACED IN SERVICE THIS YEAR 0 6.000 65.000 12.000 15.000 25.000 7.CAPITAL PORTION BUDGETED 12) EXPENDITURES 10) 11) TOTAL CURRENT FUTURE YEAR YEARS .000 9.000 6.000 25.000 62.Utilities & Auxiliaries General Administration .

Miscl.Transportation .Community Development . Services & Gen.Administration .Other Production .Production Operations .Field Office.Public Relation .General Office Expenses BUDGET SCHEDULE No 15 • Geological & Geophysical • Exploration Drilling • Development Drilling • G & G Capital • Misc.Admin General Administration .Finance & Administration .Personnel Expenses . Production Facilities • Administrative Capital • TSA (Allocated to projects) (BS#4) (BS#5) (BS#6) (BS#7) (BS#7) (BS#9) (BS#10) (BS#12) . 8 & 11 Exploration & Development . Schedule Schedule––44 Exploration Exploration&& Development Development Schedule Schedule––66 Development Development Schedule Schedule––55 Drilling Drilling Exploratory Exploratory Drilling Drilling Schedule Schedule––77 Miscl.2 : Posting for Exploration & Development Expd.Eng & Material Services .Geological & Geophysical (G&G) .Budget Preparation Step .Exploratory Exploratory Capital Capital BUDGET SCHEDULE No 4. Expl & Devl Capital • Production Facilities • Misc.

Budget Preparation – Exploratory Drilling Budget Schedule – 5 OPERATOR : BPMIGAS CONTRACT AREA : PRODUCTION SHARING CONTRACT BUDGET YEAR : BUDGETED EXPLORATORY DRILLING CAPITAL & OPERATING EXPENDITURES 1) Line DESCRIPTION OLD 2) 10) PROGRAMS NEW TOTAL UNSPENT PROGRAMS TO BE SPENT 4) 1st 5) QUARTER TIME PHASED 2nd 6) QUARTER TOTAL EXPENDITURES 3rd 7) QUARTER 4th 8) THIS QUARTER 9) SUBSEQ.000 9.000 6.000 TO BE PLACED IN SERVICE THIS YEAR .500 2.000 Other Intangible Costs 13 Total Intangible Costs 14 TOTAL COSTS Programs initiated in the budget year Unspent balances of previous years’ programs Estimated to be spent during the budget year Estimated to be spent for the next budget year 7.000 1. YEAR YEAR TANGIBLE COST : 2 Casing and Tubing 3 Well Equipment Surface 4 Well Equipment Subsurface 5 Other Tangible 6 Total Tangible Costs 7 INTANGIBLE COST : 8 Preparation and Termination 9 Drilling Operation 10 Completion 11 General 12 -BS- 3) PROGRAMS AMOUNT 1 SCHEDULE 5 3.000 1.000 2.500 2.

1 for Oil Sch. YEAR TO BE PLACED IN SERVICE THIS YEAR TANGIBLE COST : 2 Casing and Tubing 3 Well Equipment Surface 4 Well Equipment Subsurface 5 Other Tangible 6 Total Tangible Costs 7 INTANGIBLE COST : 8 Preparation and Termination 9 Drilling Operation 10 SCHEDULE 6 10) PROGRAMS PROGRAMS AMOUNT 1 NOTES Sch.000 Completion 11 General 12 Other Intangible Costs 13 Total Intangible Costs 14 TOTAL COSTS Programs initiated in the budget year Unspent balances of previous years’ programs Estimated to be spent during the budget year Estimated to be spent for the next budget year Estimated to be placed in service this budget year (Transferred to Depreciation Analysis -Sch.000 12.2 for Gas 5.000 9.13 & 14) 2. 6. 6.000 4.000 11.Budget Preparation – Development Drilling Budget Schedule – 6 OPERATOR : BPMIGAS CONTRACT AREA : PRODUCTION SHARING CONTRACT BUDGET YEAR : BUDGETED DEVELOPMENT DRILLING CAPITAL & OPERATING EXPENDITURES 1) Line DESCRIPTION OLD 2) 3) -BS- NEW TOTAL UNSPENT PROGRAMS TO BE SPENT 4) 1st 5) QUARTER TIME PHASED 2nd 6) QUARTER TOTAL EXPENDITURES 3rd 7) QUARTER 4th 8) THIS QUARTER YEAR 9) SUBSEQ.000 2.000 .000 3.000 3.000 14.

& Geoph.1 for Oil Sch. 7. THIS YEAR YEAR G & G Capital Expenditures Geol. Equipment 3 4 5 6 7 8 9 Total G&G Capital Expenditures 10 Administration Capital Expenditures 11 12 13 14 15 16 17 18 19 Total Administrative 20 TOTAL MISC.Expl & Devl.Budget Preparation – Misc.000 0 10.000 .Capital Budget Schedule – 7 OPERATOR : BPMIGAS CONTRACT AREA : PRODUCTION SHARING CONTRACT BUDGET YEAR : BUDGETED MISCELLANEOUS CAPITAL EXPENDITURES NOTES Sch. Capital Expenditures 10.000 CAPITAL EXPENDITURES Estimated to be placed in service this budget year (Transferred to Depreciation Analysis -Sch. 7.000 0 8.2 for Gas SCHEDULE 7 -BS- Functional : Exploration & Development 1) Line DESCRIPTION OLD 2) 3) PROGRAMS NEW TOTAL UNSPENT PROGRAMS AMOUNT 1 2 TO BE SPENT TIME 4) 1st QUARTER 5) PHASED 2nd 6) QUARTER 3rd 7) QUARTER 10) PROGRAMS TO BE PLACED TOTAL EXPENDITURES 4th 8) QUARTER THIS YEAR IN SERVICE 9) SUBSEQ.EXPL.000 0 10.000 2.AND DEV.13 & 14) 0 25.

000 3.500 2.000 4. 4.000 2.000 .000 1.000 12.000 0 8. 4.000 7.500 2.000 0 10.Budget Preparation – Exploration & Development Sum’y Budget Schedule – 4 OPERATOR CONTRACT AREA BUDGET YEAR : : : Line DESCRIPTION 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 BPMIGAS PRODUCTION SHARING CONTRACT EXPLORATION AND DEVELOPMENT EXPENDITURE BUDGET SUMMARY DRILLING EXPENDITURES Development Drilling : Intangible Costs Tangible Costs Total Development Drilling Exploratory Drilling : Intangible Costs Tangible Costs Total Exploratory Drilling Total Drilling Expenditures Total Intangible Expenditures Total Tangible Expenditures G&G EXPENDITURES Geological Geophysical Seismic & Other Surveys Capital Expenditures Total G&G Expenditures Total Non-Capital Expenditures EXPLORATION ADMINISTRATION EXPENDITURES Administration Other Capital Expenditures Total Administration Expenditures Total Non-Capital Expenditures TOTAL EXPLORATION & DEVELOPMENT EXPENDITURES TOTAL NON-CAPITAL EXPENDITURES TOTAL CAPITAL EXPENDITURES NOTES Sch.1 for Oil Sch.000 1.000 3.2 for Gas 1) 2) 3) 4) 5) 1st QUARTER 2nd QUARTER 3rd QUARTER 4th QUARTER SCHEDULE 4 -BS- TOTALS 2.

Other Production .Finance & Administration .Public Relation .Administration . 8 & 11 Exploration & Development . Services & Gen.Capital Capital BUDGET SCHEDULE No 4.General Office Expenses BUDGET SCHEDULE No 15 • Geological & Geophysical • Exploration Drilling • Development Drilling • G & G Capital • Misc. Facil.Personnel Expenses .Field Office.Community Development .Production Production Facil.Transportation .3 : Posting for Production Expenditures Schedule Schedule––88 Production Production Expense Expense Schedule Schedule––99 Production Production Facilities Facilities Schedule Schedule––10 10 Miscl.Geological & Geophysical (G&G) . Production Facilities • Administrative Capital • TSA (Allocated to projects) (BS#4) (BS#5) (BS#6) (BS#7) (BS#7) (BS#9) (BS#10) (BS#12) .Admin General Administration . Miscl. Expl & Devl Capital • Production Facilities • Misc.Budget Preparation Step .Production Operations .Eng & Material Services .

000 10.1 for Oil Sch. 9.2 for Gas Budget Schedule – 9 OPERATOR CONTRACT AREA BUDGET YEAR Line 1 2 3 4 5 6 7 8 9 10 BPMIGAS PRODUCTION SHARING CONTRACT PRODUCTION FACILITIES CAPITAL EXPENDITURES BUDGET : : : DESCRIPTION Civil Decks and Structural Steel Buildings Equipment and Machinery Piping Electrical Instrumentation Paint & Corrosion Protection Other TOTAL PRODUCTION FACILITIES EXPENDITURES Production Facilities reported separately for Investment Credit purposes. QUARTER QUARTER QUARTER QUARTER YEAR YEARS 15. 1) OLD 2) 3) PROGRAMS NEW TOTAL UNSPENT PROGRAMS TO BE AMOUNT SPENT 25.000 65.000 .13 & 14) 10.000 SCHEDULE 9 -BS- 10)PROGRAMS TIME PHASED TOTAL EXPENDITURES 4) 1st 5) 2nd 6) 3rd 7) 4th 8) THIS 9) SUBSEQ.000 20.000 50.000 20.000 Programs initiated in the budget year Unspent balances of previous years’ programs Estimated to be spent during the budget year Estimated to be spent for the next budget year Estimated to be placed in service this budget year (Transferred to Depreciation Analysis -Sch.Budget Preparation – Production Facilities NOTES Sch.000 TO BE PLACED IN SERVICE THIS YEAR 100. 9.000 75.

000 5.000 TO BE PLACED IN SERVICE THIS YEAR 50. 10.1 for Oil Sch.500 25.500 10. 10.500 TOTAL PRODUCTION MISCELLANEOUS Applied for capital items which are not illegible for Investment Credit 10 -BS- Programs initiated in the budget year Unspent balances of previous years’ programs Estimated to be spent during the budget year Estimated to be spent for the next budget year Estimated to be placed in service this budget year (Transferred to Depreciation Analysis -Sch.Budget Preparation – Miscl. Production Capital NOTES Sch. QUARTER QUARTER QUARTER QUARTER YEAR YEARS 7.500 10)PROGRAMS TIME PHASED TOTAL EXPENDITURES 4) 1st 5) 2nd 6) 3rd 7) 4th 8) THIS 9) SUBSEQ.000 10.2 for GasSCHEDULE Budget Schedule – 10 OPERATOR CONTRACT AREA BUDGET YEAR Line 1 2 3 4 5 6 7 8 9 10 BPMIGAS PRODUCTION SHARING CONTRACT MISCELLANEOUS FACILITIES CAPITAL EXPENDITURES BUDGET Functional Area : PRODUCTION : : : DESCRIPTION Construction Utilities & Auxiliaries 1) OLD 2) 3) PROGRAMS NEW TOTAL UNSPENT PROGRAMS TO BE AMOUNT SPENT 12.13 & 14) 5.000 32.000 37.000 .

T ra n s p o rta tio n . D e liv e ry S u p e rv is io n M a in te n a n c e O th e r G a s P ro c e s .Budget Preparation – Production Exp Summary Budget Schedule – 8 (Line 1 – 33) OPERATO R CONTRACT AREA BUDGET YEAR L in e 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 : : : D E S C R I P T I O N D IR E C T P R O D U C T IO N E X P E N S E S .G A S G a s W e ll O p e ra tio n s G a s P ro d u c tio n F a c ilitie s O p e ra tio n s G a s T ra n s p o rta tio n S u p e rv is io n M a in te n a n c e O th e r D ire c t P ro d u c tio n E xp e n s e s .0 0 0 5 .0 0 0 5 .G a s G A S P R O C E S S IN G G a s P la n t S to ra g e .0 0 0 2 .M a in te n a n c e S te a m S e rv ic e s E le c tric ity S e rv ic e s In d u s tria l a n d D o m e s tic W a te r S e rvic e C o m p re s s e d A ir S e rv ic e O th e r T o ta l U tilitie s a n d A u xillia rie s T O T A L P R O D U C T IO N O P E R A T IO N S B P M IG A S P R O D U C T IO N S H A R IN G C O N T R A C T P R O D U C T IO N E X P E N S E B U D G E T S U M M A R Y ONSHORE / OFFSHORE T I M E P H A S E D 1) 2) 3) 4) 1st 2nd 3 rd 4 th Q TR Q TR Q TR Q TR SCH EDU LE -B S - 8 C A P IT A L E X P E N D IT U R E S 5 )T O T A L FOR THE YEAR 6) T H IS YEAR 7)P LA C E D IN T O S E R V IC E 5 .0 0 0 2 .E xp . H a n d lin g .5 0 0 5 0 . T ra n s p o rta tio n .0 0 0 8 .fla rin g c o s ts ) T o ta l G a s P ro c e s s in g U T IL IT IE S A N D A U X IL L IA R Y O P E R A T IO N S P ro d u c tio n T o o ls a n d E q u ip t.0 0 0 2 . H a n d lin g .0 0 0 2 .0 0 0 .O il T o ta l D ire c t P ro d u c tio n E xp e n s e s .0 0 0 6 5 . D e liv e ry S u p e rv is io n M a in te n a n c e O th e r D ire c t P ro d u c tio n E xp e n s e s .0 0 0 3 2 .G a s T o ta l D ire c t P ro d u c tio n E xp e n s e s .(In c l.O il D IR E C T P R O D U C T IO N E X P E N S E S .0 0 0 1 0 0 .O IL O il W e ll O p e ra tio n O il P ro d u c tio n a n d P ro c e s s in g F a c ilitie s S e c o n d a ry R e c o ve ry O p e ra tio n s S to ra g e .0 0 0 2 1 .0 0 0 6 .

S V C S A N D G E N E R A L A D M IN . E X P E N D IT U R E S A L L O C A T E D T O O IL O P E R A T IO N S A L L O C A T E D T O G A S O P E R A T IO N S 50 51 52 53 P E R IO D 1st Q U AR TER 2nd Q UARTER 3 rd Q U A R T E R 4 th Q U A R T E R P R O D U C T IO N C O S T S U M M A R Y T h o u s a n d s o f E q u iva le n t B a rre ls MBBL 9) PROD.a n d G e n e ra l T O T A L P R O D U C T IO N E X P E N S E S L e s s D e p re c ia tio n E xp e n s e s N O N -C A P IT A L P R O D .Budget Preparation – Production Exp Summary Budget Schedule – 8 (Line 34 .53) OPERATOR CONTRACT AREA BUDGET YEAR Line 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 BPMIGAS PRODUCTION SHARING CONTRACT PRODUCTION EXPENSE BUDGET SUMMARY ONSHORE / OFFSHORE TIME PHASED 1) 2) 3) 4) 1st 2nd 3rd 4th QTR QTR QTR QTR : : : DESCRIPTION F IE L D O F F IC E . COST 8) O F P R O D U C T IO N PER BARREL SCHEDULE 8 -BS- CAPITAL EXPENDITURES 5)TOTAL 6) FOR THIS THE YEAR YEAR 7)PLACED INTO SERVICE . G e n e ra l a n d A d m in is tra tio n T e c h n ic a l S u p p o rt S e rv ic e M a te ria l S e rvic e s T ra n s p o rta tio n C o s ts O ffic e a n d M is c . S vc s .B u ild in g O p e ra tio n s P e rs o n n e l E xp e n s e s P u b lic R e la tio n s D e p re c ia tio n O th e r T o ta l F ie ld O ffic e .

Community Development .Administration .Finance & Administration .Field Office. Expl & Devl Capital • Production Facilities • Misc.Admin General Administration .4 : Posting for General & Admin.Public Relation . 8 & 11 Exploration & Development . Services & Gen.Transportation .Budget Preparation Step .Geological & Geophysical (G&G) . Expenditures Schedule Schedule––11 11 General General&& Administration Administration Schedule Schedule––12 12 G&A G&A Capital Capital BUDGET SCHEDULE No 4.Personnel Expenses .Production Operations .Other Production .General Office Expenses BUDGET SCHEDULE No 15 • Geological & Geophysical • Exploration Drilling • Development Drilling • G & G Capital • Misc.Eng & Material Services . Production Facilities • Administrative Capital • TSA (Allocated to projects) (BS#4) (BS#5) (BS#6) (BS#7) (BS#7) (BS#9) (BS#10) (BS#12) .

000 TIME 5) 2nd QTR 1.000 TOTAL EXPENDITURES 8) 1.2 for Gas Budget Schedule – 10 OPERATOR CONTRACT AREA BUDGET YEAR BPMIGAS PRODUCTION SHARING CONTRACT MISCELLANEOUS CAPITAL EXPENDITURES BUDGET Functional Area : General & Administration : : : 1) Line 1 2 3 4 5 6 7 8 9 10 DESCRIPTION Furniture and Office Equipment OLD 2) SCHEDULE 12 -BS- 3) PROGRAMS NEW UNSPENT AMOUNT PROGRAMS 4.000 10) PROGRAMS TOTAL TO BE SPENT 4.MISCELLANEOUS Programs initiated in the budget year No unspent balances of previous years’ programs Estimated to be spent during the budget year No estimated to be spent for the next budget year Estimated to be placed in service this budget year (Transferred for Depreciation Analysis .000 PHASED 6) 3rd 7) 4th QTR QTR 1. 12. Administrative Capital NOTES Sch.13 & 14) 0 TO BE PLACED IN SERVICE THIS YEAR 4.ADMIN.000 4) 1st QTR 1.Budget Preparation – Miscl.000 TOTAL GEN.1 for Oil Sch. YEARS 4. 12.Sch.000 .000 THIS YEAR 9) SUBSEQ.

Budget Preparation – Administrative Summary Budget Schedule – 11 (Line 1 – 30) O P ER AT O R C O N TR A C T A R EA B U D G ET Y EAR Line 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 : : : DESCRIPTION FIN A N C E & A D M IN ISTR AT IO N Legal S ervices Audit S ervices Tax Services Business Insurance O ther Total Finance and A dm inistration EN G IN E E R IN G S E R V IC E S M A T E R IA L S E R V IC E S M aterials Adm inistration H andling and Transportation Stock D ifferences D eterioration. B reakage R econditioning S alvage S crap O ther Total M aterials S ervices T R AN SP O R T A T IO N CO S TS Air Autom obile O ther Total Transportation C osts PE R S O N N EL E XP EN SE S E m ployee R elation Training Accom odation W elfare O ther Total P ersonnel E xpenses B PM IG AS SC H E D U LE 11 P R O D U C TIO N SH AR IN G C O N TR AC T -B S AD M IN IS T R A TIV E E X P E N S E B U D G E T S U M M A R Y C A P IT A L E X P E N D ITU R E S TIME PHASED 1) 2) 3) 4) 5) 6) 7) 1st 2nd 3rd 4th TO T A L F O R TH IS Y E A R P LA C E D IN Q U A R T E R Q U A R TE R Q U A R T E R Q U A R TE R TH E Y E A R S E R V IC E .

EXPENDITURES ALLOCATED TO OIL OPERATIONS ALLOCATED TO GAS OPERATIONS Explanation of Interest Claimed : CAPITAL EXPENDITURES TIME PHASED 1) 2) 3) 4) 5) 6) 7) 1st 2nd 3rd 4th TOTAL FOR THIS YEAR PLACED IN QUARTER QUARTER QUARTER QUARTER THE YEAR SERVICE 4. TOTAL ADMINISTRATIVE EXPENSES Less Depreciation Expenses NON-CAPITAL ADMIN.Budget Preparation – Administrative Summary Budget Schedule – 11 (Line 31 – 64) Line 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52 53 54 55 DESCRIPTION PUBLIC RELATIONS Trips Other Total Public Relation COMMUNITY DEVELOPMENT Community Projects Other Total Community Development GENERAL OFFICE EXPENSES Stationary and Supplies Communications Furniture and Equipment (Low Value) Rents.000 4. Licences Travel and Entertainment (non-allocated) Computerization Depreciation Other Total General Office Expenses OVERHEAD FROM ABROAD INTEREST ON LOANS FOR CAPITAL INVEST.000 .

Admin.& Gen.&Admin. Capital Capital BUDGET SCHEDULE 13 ASSETS PLACED INTO SERVICE THIS YEAR BUDGET SCHEDULE 14 DEPRECIATION ANALYSIS .5 : Assets Placed into Services and Depreciation Analysis Schedule Schedule––66 Development Development Dilling Dilling Schedule Schedule––77 Expl Expl&&Devl Devl Capital Capital Schedule Schedule––99 Production Production Facilities Facilities Schedule Schedule––10 10 Miscl MisclProduction Production Capital Capital Schedule Schedule––12 12 Gen.Budget Preparation Step .

25.000 Tangible Cost of Development Drilling (Sch.Budget Preparation – Assets PIS Budget Schedule – 13 OPERATOR CONTRACT AREA BUDGET YEAR Line : : : BPMIGAS PRODUCTION SHARING CONTRACT BUDGETED CAPITAL ASSETS TO BE PLACED INTO SERVICE ASSET DESCRIPTION 1 GROUP 1 2 Automobiles 3 Light Trucks & Tractor Units 4 Heavy Trucks & Trailers 5 Buses 6 Aircraft 7 Construction Equipment 8 Furniture & Office Equipment 9 GROUP 2 10 Construction Utilities & Auxiliaries 11 Construction Housing & Welfare 12 Production Facilities 13 Water Transportation Equipment 14 Drilling Production Tools 15 Railroad Cars & Locomotive 16 TOTAL FUNCTIONAL EXPLORATION 1) Development 2) Exploratory 3)Geological 4) General Drilling Drilling Geophysical & Admin. 4.000 8) TOTAL 29.000 11.000 50.1 < 7 years reserves Sch.9) General Admin Offife Equipment (sch.1 -BS- 7)GENERAL & ADMIN.6) Exploration Office equipment (Sch.0 Summary Sch.000 111. AREA PRODUCTION 5)Production 6) General Operations & Admin.000 100.2 > 7 years reserves .000 NOTES Sch 13.7) Utilities & Auxiliaries (Sch.10) Production Facilities (Sch. 13.12) SCHEDULE 13.000 50. 13.

000 45.750 D 66.500 13.000 12.2 > 7 years reserves 60.1 < 7 years reserves Sch. Dep. Dep. Accum.500 D 111.000 27. 2006 Deprec.250 27.500 D 14.000 15.0 Summary Sch.Expenses 15. Cost Placed Into Service 2005 7) 8) 9) Accum.000 . Bal.2004 1) ASSET 2) 3) 4) 5) GROUP Orig.250 37. Dep. SCHEDULE 14. D in Service 5/50% 5/25% 10/25% 5/25% NOTES Sch 14.1 -BS- 6) D Orig.000 14.000 17 18 19 20 DEPRECIATION ANALYSIS Exploration/Development Production Administration Total Total 2006 12) Deprec. 14.Budget Preparation – Depreciation Budget Schedule – 14 OPERATOR CONTRACT AREA BUDGET YEAR Line BPMIGAS PRODUCTION SHARING CONTRACT BUDGETED DEPRECIATION SCHEDULE : : : 2006 ASSET DESCRIPTION 1 GROUP 1 Automobiles 2 3 Light Trucks & Tractor Units 4 Heavy Trucks & Trailers 5 Buses Aircraft 6 7 Construction Equipment 8 Furniture & Office Equipment 9 GROUP 2 10 Construction Utilities & Auxiliaries 11 Construction Housing & Welfare 12 Production Facilities 13 Water Transportation Equipment 14 Drilling Production Tools 15 Railroad Cars & Locomotive 16 TOTAL Placed Into Service 1998 . Current Year 10)Assets 11) Placed Dep.250 Page 4 of 4 12) Total 2006 D Dep. Bal. 29.250 66.500 50.500 11.750 D 12. 14. 2006 LIFE Cost Deprec.000 11. Dep.

& Gen.12 Gen.9.6 : Summarizing Expenditures and Operating Costs Sch Sch––14 14 Depreciation Depreciation Sch Sch––4.9.5.Budget Preparation Step .&Admin.12 11. Admin.10 8.7 Exploration Exploration&& Development Development Sch Sch––8. Expenditures Expenditures BUDGET SCHEDULE 3 EXPENDITURES & OPERATING COSTS BUDGET SCHEDULE 3A EXPENDITURES CAPITAL & NON CAPITAL .10 Production Production Expenditures Expenditures Sch Sch––11.6.6.5.7 4.

000 SCHEDULE 3 -BS- 3) 2nd QTR 2. 3) CURRENT OPERATING EXPEND.500 29.Capital Total Exploration Production .000 10.000 22.500 29.000 0 1.000 12.000 36.375 16.500 .000 35.813 15.313 3.813 5.Capital Total Production Administration .375 3.000 TOTALS 7.000 8.000 1.375 3.000 10.000 97.000 97.000 8.250 15.500 13.000 7.375 16.000 6.000 1.000 9.313 25.000 29.000 4.000 126.Non Capital Administration .250 66.313 26.500 0 4. 7. .500 27. 12.000 43.500 7.000 22.Non Capital Expl. 3.000 159.000 5.313 3.813 3.000 30.CAPITAL TOTAL EXPENDITURES 2) 1st QTR 1.000 15.500 4.500 29.000 DESCRIPTION Expl.000 7.000 1.500 13. 3.000 1.000 4.000 10.000 22.813 5.500 4.500 11.000 9.250 37.000 9.313 25.500 159.000 9.500 4.500 66.500 2.000 123.375 3.& Dev.500 29.000 3.000 34.000 29.375 3.000 1.500 126.2 for Gas Budget Schedule – 3 & 3A OPERATOR CONTRACT AREA BUDGET YEAR BPMIGAS PRODUCTION SHARING CONTRACT EXPENSE AND EXPENDITURES BUDGET SUMMARY : : : 1) LINE 1 2 3 4 5 6 7 8 9 10 11 DESCRIPTION EXPLORATION & DEVELOPMENT Drilling Geological & Geophysical Administration Total Exploration & Development PRODUCTION Operations Administration Total Production GENERAL & ADMINISTRATION TOTALS OPERATOR CONTRACT AREA BUDGET YEAR 2) CURRENT CAPITAL EXPEND.000 1 2 3 4 5 6 7 8 9 10 11 12 CURRENT YEAR OPERATING EXPENSES TIME PHASED CURRENT 5) 6) 7) 8) 9) YEAR 1st 2nd 3nd 4nd TOTALS DEPREC.500 29. QUARTER QUARTER QUARTER QUARTER 19.000 38.Budget Preparation – Expenditures Summary NOTES Sch.000 45.000 35.000 37.500 37.500 7.375 16.000 15.500 27.500 5) 4th QTR 2.250 22.000 97.375 17.000 37.000 29.000 30.250 102.000 5.313 25.500 0 1.NON CAPITAL TOTAL EXPENDITURES .000 126.813 5.250 3.000 8.000 123.000 BPMIGAS PRODUCTION SHARING CONTRACT TOTAL BUDGETED EXPENDITURES : : : 1) Line 4) TOTAL EXPEND.000 22.813 5.500 1.000 9.000 8.500 2.000 0 1.000 SCHEDULE 3A -BS- 4) 3rd QTR 1.500 7.Non Capital Production . .1 for Oil Sch.000 7.000 0 1.& Dev.500 36.000 7.Capital Total Administration TOTAL EXPENDITURES .

Budget Preparation Step .7 : Matching Operating Costs to Lifting Value Sch Sch––16 16 Lifting Lifting Forecast Forecast Sch Sch––33 Non NonCapital Capital Costs Costs Sch Sch––14 14 Depreciation Depreciation Gross Revenue BUDGET SCHEDULE 1 Operating Costs FINANCIAL STATISTICAL REPORT Sharing Mechanism Operating Costs consist of : a) Current year non-capital costs b) Current year depreciation for capital costs c) Current year allowed recovery of prior year’s unrecovered Operating Costs .

690 819 819 828 828 3.Budget Preparation – Expenditures Summary Budget Schedule – :16 OPERATOR CONTRACT AREA BUDGET YEAR BPMIGAS PRODUCTION SHARING CONTRACT PRODUCTION LIFTING FORECAST CRUDE OIL/CONDENSATE .1 for Oil Sch.2 for Gas .294 2.MBBLS FIELD PRODUCTION 2) 3) 4) 5) : : TIME PERIOD LINE YEAR MONTH 1 2006 JANUARY 2 FEBRUARY 3 MARCH 4 1ST QUARTER 5 6 APRIL 7 MAY 8 JUNE 9 2ND QUARTER 10 11 JULY 12 AUGUST 13 SEPTEMBER 14 3RD QUARTER 15 16 OCTOBER 17 NOVEMBER 18 DECEMBER 19 4TH QUARTER 20 21 TOTALS 1994 22 23 2007 1ST QUARTER 24 2ND QUARTER 25 3RD QUARTER 26 4TH QUARTER 27 28 TOTALS 2008 29 TOTALS 2009 30 TOTALS 2010 31 TOTALS 2011 1) 350 280 310 940 SCHEDULE 16.555 NOTES Sch. 16.1 -BS- 15) TOTAL 28 x 10 mb 300 310 300 910 310 310 300 920 Based on Production Forecast Consider Begininng Inventory in January 310 300 310 920 3.738 2.920 2. 16.

394) 8.160 4th Quarter 8) $ Amount 9) $ BOE 920 60.280 45.645 7.000 168.500 2.500 41.897 11.689) 1.040 44.519 (1.404 7.635 (1.813 13.710 7.631 (15.000 42.400 11.507 6.394 .298 3.055 41.576 0 2.120 25.063 3. 1.00 54.890 3.500 41.Budget Preparation – Financial Status Report NOTES Sch.938) 3.981 3.298 2.519 1.120 8.966) 15.00 221.404 4.500 2.635 1.394 45.688 41.635 3.519 15.500 43.000 1.745 3.280 177.026 2.1 for Oil BPMIGAS PRODUCTION SHARING CONTRACT BUDGETED FINANCIAL STATUS REPORT .00 55.938 3.00 55.500 2.000 2. 1.830 31.952 1.500 43.000 176.010 13) 3rd QTR 14) 4th QTR Taxable Share (Line 27) Add : Investment Credit Less: Bonus Payment Taxable Income Gov't Tax Entitlement $ BOE 3.688 41.000 2.390 0 12.750 168.813 13.813 13.981) 3.400 44.000 43.200 11.160 TOTALS 10) $ Amount 60.500 3.067 4.489 0 7.000 44.920 43.063 12.185 767 (3.665 7.680 Line 32 33 34 35 11) 1st QTR 12) 2nd QTR $ BOE 920 60.966 15.773 2.298 (2.250 54.00 15) 16) 17) 18) 19) 1st QTR 2nd QTR 3rd QTR 4th QTR TOTALS 4.680 25.063) 2.981 3.120 2nd Quarter 4) $ Amount 3rd Quarter 6) 5) $ BOE $ Amount 910 60.160 102.Current Year Assets TOTAL COST RECOVERY TOTAL RECOVERABLES EQUITY TO BE SPLIT Indonesia Share Government FTP Share Government Equity Share Domestic Requirement Government Tax Entitlement TOTAL INDONESIA SHARE Contractor Share Contractor FTP Share Contractor Equity Share Less: Gross Domestic Requirement Add : Domestic Requirement Adjustment Taxable Share Government Tax Entitlement Net Contractor Share Total Recoverables TOTAL CONTRACTOR SHARE 3) $ BOE 940 56.981) 3.745) 1.688 42.660 26.897 3.2 for Gas Budget Schedule – 1 OPERATOR CONTRACT AREA BUDGET YEAR : : : 1) LINE 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 DESCRIPTION 1st Quarter 2) $ Amount LIFTINGS Oil/Condensate MBBLS Gas MMCF GROSS REVENUE FIRST TRANCHE PETROLEUM GROSS REVENUE After FTP INVESTMENT CREDIT COST RECOVERY : Unrecovered Other Costs Current Year Operating Costs Depreciation .370 3.952 (1.000 9.000 1.195 0 1.770 1.044 (4.620 TAX COMPUTATION UNRECOVERED OTHER COST Balance Beginning Additions Recovered Balance End of Quarter 7) SCHEDULE 1 -BS- 60.185 335 (3.OIL/GAS/SUMMARYSch.745 10.200 11.600 10.555 3.067) 4.000 43.813 13.893 0 1.897) 2.952 3.235 41.254 1.404 (7.689 15.010 168.040 44.688 43.855 825 0 1.000 11.150 485 (3.735 3.890 42.Prior Year Assets Depreciation .855 1.690 25.689 10.830 43.

4. 4.88&&11 11 Sch Sch––17 17 Expenditures Expenditures By ByCategory Category .8 : Completing Other Budget Schedules Sch Sch––22 Key KeyOperating Operating Statistics Statistics Sch Sch––11 Financial FinancialStatus Status Sch Sch––88 Production ProductionExp Exp Sch Sch––16 16 Lifting LiftingForecast Forecast Sch Sch––4.Budget Preparation – Other Schedules Step .88&&11 11 Attachment Attachmentto to Sch Sch––4.

& DEV. EXPENDITURES 21 Administration 22 Other 23 Capital Expenditures 24 Total Administration Expenditures 25 Total Non-Capital Expenditures 26 TOTAL EXP. EXPENDITURES 27 TOTAL NON-CAPITAL EXPENDITURES 28 TOTAL CAPITAL EXPENDITURES EMPLOYEE BENEFIT EXPAT EXPAT NATIONAL MATERIALS TECHNICAL CONTRACT/ SALARIES & WAGES SERVICES SERVICES IMPORT NATIONAL OVERSEAS DOMESTIC Consumables Capital INSURANCE DOMESTIC Consumables Capital ATTACHMENT TO SCHEDULE 4 -BS- ENVIRON- SUNDRIES TOTAL OVERSEAS DOMESTIC MENT CTRL OVERSEAS DOMESTIC OVERSEAS DOMESTIC DOMESTIC TOTAL .Budget Preparation – Other Schedules Attachment to Budget Schedule – 4 OPERATOR CONTRACT AREA BUDGET YEAR : : : BPMIGAS PRODUCTION SHARING CONTRACT BUDGETED EXPLORATION AND DEVELOPMENT EXPENDITURES PERSONNEL COST DESCRIPTION 1 DRILLING EXPENDITURES 2 Development Drilling : 3 4 Intangible Costs Tangible Costs 5 Total Development Drilling 6 Exploratory Drilling : 7 Intangible Costs 8 Tangible Costs 9 Total Exploratory Drilling 10 Total Drilling Expenditures 11 Total Intangible Expenditures 12 13 14 Total Tangible Expenditures G&G EXPENDITURES Geological 15 Geophysical 16 Seismic & Other Surveys 17 Capital Expenditures 18 Total G&G Expenditures 19 Total Non-Capital Expenditures 20 EXPL. ADM.

Oil DIRECT PRODUCTION EXPENSES .Budget Preparation – Other Schedules Attachment to Budget Schedule – 8 OPERATOR CONTRACT AREA BUDGET YEAR : : : PERSONNEL COST DESCRIPTION 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 DIRECT PRODUCTION EXPENSES .GAS Gas Well Operations Gas Production Facilities Operations Gas Transportation Supervision Maintenance Other Direct Production Expenses .OIL Oil Well Operation Oil Production and Processing Facilities Secondary Recovery Operations Storage. Delivery Supervision Maintenance Other Direct Production Expenses .Oil Total Direct Production Expenses . Transportation.Gas SALARIES & WAGES EXPAT NATIONAL TECHNICAL CONTRACT/ EMPLOYEE BENEFIT SERVICES SERVICES EXPAT NATIONAL OVERSEAS DOMESTIC BPMIGAS PRODUCTION SHARING CONTRACT BUDGETED PRODUCTION EXPENSE MATERIALS IMPORT Consumables Capital DOMESTIC Consumables Capital INSURANCE OVERSEAS SUNDRIES ENVIRONDOMESTIC MENT CTRL OVERSEAS DOMESTIC DOMESTIC ATTACHMENT TO SCHEDULE 8 -BS- TOTAL OVERSEAS DOMESTIC TOTAL . Handling.

Budget Preparation – Other Schedules Attachment to Budget Schedule – 11 OPERATOR : CONTRACT AREA : BUDGET YEAR : BPMIGAS PRODUCTION SHARING CONTRACT ADMINISTRATIVE EXPENSE BUDGET SUMMARY PERSONNEL COST Line DESCRIPTION SALARIES & WAGES EMPLOYEE BENEFIT EXPAT EXPAT NATIONAL NATIONAL TECHNICAL CONTRACT/ SERVICES SERVICES OVERSEAS DOMESTIC MATERIALS IMPORT Consumables Capital DOMESTIC Consumables Capital 1 FINANCE & ADMINISTRATION 2 Legal Services Audit Services 3 4 Tax Services 5 Business Insurance 6 Other 7 Total Finance and Administration 8 ENGINEERING SERVICES 9 MATERIAL SERVICES 10 Materials Administration 11 Handling and Transportation INSURANCE OVERSEAS DOMESTIC SUNDRIES ENVIRONMENT CTRL OVERSEAS DOMESTIC DOMESTIC ATTACHMENT TO SCHEDULE 11 -BS- TOTAL OVERSEAS DOMESTIC TOTAL .

Budget Preparation – Other Schedules Budget Schedule – 17 OPERATOR : BPMIGAS CONTRACT AREA : BUDGET YEAR : SALARIES & WAGES EXPAT 1 CAPITAL EXPENDITURES 2 Exploration & Development 3 Production 4 Administration 5 6 Total Capital Expenditures OPERATING EXPENDITURES 7 Exploration & Development 8 Production 9 Administration 10 11 Total Operating Expenditures TOTAL EXPENDITURES -BS- BUDGET YEAR EXPENDITURES PERSONNEL COST DESCRIPTION SCHEDULE 17 PRODUCTION SHARING CONTRACT NATIONAL SERVICES SERVICES NATIONAL OVERSEAS DOMESTIC EMPLOYEE BENEFIT EXPAT INSURANCE MATERIALS TECHNICAL CONTRACT/ IMPORT Consumables DOMESTIC Capital Consumables Capital ENVIRON- SUNDRIES TOTAL OVERSEAS DOMESTIC MENT CTRL OVERSEAS DOMESTIC OVERSEAS DOMESTIC DOMESTIC TOTAL .

Expatriates . Expenditures for Gross Salaries & Wages of the PSC National Employees. 3 CONTRACT / SERVICES : Expenditures for any job or project done by local company or consultant.Capital : Expenditures for consumable materials. 5 INSURANCE ~ Overseas ~ Domestic : Expenditures for overseas insurance coverage. and Schedule . spent overseas.Capital ~ Domestic . : Expenditures for Employee Benefits of the PSC's National Employees. : Expenditures for materials to be capitalized. purchased from/supplied by foreign market. including the cost of inspection done by Government Officials.Consumables .National : : ~ Employee Benefits . 2 TECHNICAL SERVICES : Expenditures for non-routine/extraordinary.. 4 MATERIALS ~ Import . pollution. 7 SUNDRIES ~ Overseas ~ Domestic : Expenditures other than mentioned earlier.17 DESCRIPTION OF COLUMNS 1 PERSONNEL COST : ~ Salaries & Wages .National Expenditures for Gross Salaries & Wages of the PSC Expatriate Personnel.Consumables . not including personnel costs. not including material expenditures. : Expenditures for materials to be capitalized. such as Technical Services from Abroad. upstream jobs with competitive tariffs done by experts/consultant from abroad that cannot be done by domestic personnel or consultants. : Expenditures for consumable materials. : Expenditures for domestic insurance coverage. purchased from/supplied by foreign market.Budget Preparation – Other Schedules Attachment to Schedule 4. purchased from/supplied by domestic market.Expatriates : . provided domestically and treated as Direct Charges.8 11. purchased from/supplied by domestic market. . 6 ENVIRONMENTAL CONTROL : Expenditures to protect the area (location) or field from environmental damage. etc. : Domestic Expenditures other than mentioned earlier. Expenditures for Employee Benefits of the PSC's Expatriate personnel.

Bambang Bambang Yuwono Yuwono .

-Dividend DividendTax Tax Gov’t Gov’tTax Tax Indonesia Indonesia Share Share Net Net Contr.-Non PSC Costs Non PSC Costs Cost Cost Recovery Recovery Total TotalContr. Share Share 2.1.PSC PSCTaxation Taxation--Overview Overview Gross GrossRevenue Revenue FTP FTP INCOME INCOMETAX TAX&&FINAL FINALTAX TAXON ONPROFIT PROFIT Cost Cost Recovery Recovery 1.-PSC Operating PSC OperatingCosts Costs . Taxable TaxableIncome Income(1) (1)––(2) (2) Tax TaxPayments: Payments: .-Income IncomeTax Tax .Share Share OTHER OTHERTAXES TAXES&&LEVIES LEVIES . Costs/Tax Costs/TaxDeductions: Deductions: . Contr.3. Contractor ContractorGross GrossIncome: Income: (+) (+)Cost CostRecovery Recovery (+) (+)FTP FTP&&Equity EquityShare Share (-(-) )DMO DMO (+) DMO (+) DMOFee Fee (+/ ) Over/Under (+/-) Over/UnderLifting Lifting Equity Equityto tobe beSplit Split BPMIGAS BPMIGAS Share Share CONTRACTOR CONTRACTOR Share Share DMO DMO DMOFee DMOFee 3. Contr.2.

Income IncomeTax Tax& &Final FinalTax Taxon onProfit Profit Thru 1983 Thru 1994 To Present Income Tax 45% 35% 30% Tax on Interest.5% 37% Total . .7/1984 KMK 458/012/1984 UU PPh No. Dividend & Royalty 10% 10% 30% 50.5% 41.The application of tax treaty results in lower net after tax shares for the Government. Dividend & Royalty 20% 20% 20% Total 56% 48% 44% Ordonantie 1925 KMK 267/012/1978 UU PPh No. including new contracts revise production splits to have the same net after tax shares. the rate of Tax on Interest. Dividend and Royalty due to tax treaty: Income Tax 45% 35% 30% Tax on Interest. .Some. Examples of 10% Rate of Tax on Interest.10/1994 Reference When a partner in a PSC is subject to a tax treaty with a foreign country tax regime. Dividend and Royalty may be so affected that the total tax rate changes to a lower rate.

012/1978 (KepMen 267) 1. 2. Period of Prior to KepMen 267: ‰ ‰ ‰ ‰ Cost Recovery maximum 40% of Gross Revenue. collecting and maintaining income (‘tax deductions’). Corporate Tax 45% and Dividend Tax 20% imposed on Taxable Income. net after tax. Equity to be Split minimum 60%.Income IncomeTax Tax& &Final FinalTax Taxon onProfit Profit Initial Development (thru End of 1983) Tax Reference: Corporate Income Tax Ordinance 1925 Ministrial Decree No. Taxable Income calculated from Gross Income minus costs of obtaining.shared between Pertamina and Contractor. Period of KepMen 267 thru 31/12/1983: ‰ ‰ ‰ Contractor required tax receipts for corporate (PPs) & dividend tax (PBDR). ‰ KepMen 267 ruled out that the calculation of tax deductions to be similar to that of PSC Accounting Procedures (known as ‘Uniformity Principle”) . 267/KMK. All taxes and duties are paid by Pertamina. 85%/15% for crude Oil and 70%/30% for Gas.

For 85/15 Crude Oil at 45% PPs and 20% PBDR. Total Tax Rate 56%. For 70/30 Gas. ‰ Costs of obtaining. ‰ Other Taxes and levies are paid by Pertamina . collecting and maintaining the income shall be in accordance with generally accepted and recognized accounting principles. therefore Contractor Share 34. ‰ Grossing-up contractual share splits to reflect the same net after tax.0909%. Contractor share 68.Income IncomeTax Tax& &Final FinalTax Taxon onProfit Profit Contractual Adjustments following KepMen 267 ‰ Contractor(s) paid Corporate tax (PPs) and Dividend Tax (PBDR) directly to the Government.1818% ‰ Double declining balance method of depreciation with a switchover to straight line method. ‰ No more of Cost Recovery 40% ceiling.

012/1984 (KepMen 458) Ministrial Decree No. . ‰ All taxes and duties are paid by Pertamina. 7 / 1983 Ministrial Decree No.6923% ‰ PSC signed prior to 1/1/1984 may apply the previous share splits. For 70/30 Gas.Income IncomeTax Tax& &Final FinalTax Taxon onProfit Profit Period of 1984 thru End of 1994 Tax Reference: Income Tax Law No. Total Tax rate 48%. Contractor share 57.8462%. 267/KMK. therefore Contractor Share 28. 458/KMK. For 85/15 Crude Oil at 35% PPs and 20% PBDR.012/1984 (KepMen 267) ‰ Corporate Tax Tariff changed from 45% to 35% ‰ Dividend Tax remains the same (20%) ‰ Grossing-up contractual share splits to reflect the same net after tax.

For 70/30 Gas.5714% ‰ PSC signed prior to 1/1/1995 may apply the previous share splits. 267/KMK. 10 / 1994 Ministrial Decree No.012/1984 (KepMen 267) ‰ Corporate Tax Tariff changed from 35% to 30% ‰ Dividend Tax remains the same (20%) ‰ Grossing-up contractual share splits to reflect the same net after tax. For 85/15 Crude Oil at 35% PPs and 20% PBDR.7857%. ‰ All taxes and duties are paid by Pertamina. 458/KMK.012/1984 (KepMen 458) Ministrial Decree No. therefore Contractor Share 26. .Income IncomeTax Tax& &Final FinalTax Taxon onProfit Profit Period of 1995 thru 23/11/2001 Tax Reference: Income Tax Law No. Contractor share 53. Total Tax Rate 44%.

• Provisions related to Income Tax and Final Tax on Profit remain the same as previously set out.Income IncomeTax Tax& &Final FinalTax Taxon onProfit Profit Period of following Law No. • Contractor is obligated to pay exploration and exploitation fee (iuran) for the opportunity given to operate a block and as a compensation for extracting oil and gas reserves.012/1984 (KepMen 267) ‰ PS Contracts following the enactment of the Oil & Gas Law 2001 : • Contractor has an option to apply ‘fixed taxation’ or ‘floating taxation’. 17 / 2000 Ministrial Decree No. 458/KMK.22 / 2001 Tax Reference: Oil and Gas Law 2001 Income Tax Law No. 267/KMK.012/1984 (KepMen 458) Ministrial Decree No. • Contractor is obligated to pay all taxes and levies other than Income Tax & Final Tax on Profit. ‰ Terms & conditions of PS Contracts signed prior to Oil & Gas Law remain unchanged. except Pertamina replaced by BPMIGAS. .

Current
Current Issues
Issues
‰ Law No.22 / 2001 (Applicable to PSC signed following 23/11/2001):
Business entities shall pay Income Tax and Final Tax on Profit and all other
Indonesian taxes, import duties, local taxes and levies.
‰ PSCs signed after Oil & Gas Law contains the following clauses:
PSC Section V : Rights and Obligations
CONTRACTOR shall pay to the Government the Republic of Indonesia the income
tax and the final tax on profit after tax deductions imposed on it pursuant to the
Indonesia Income Tax Law and its implementing regulations.
BPMIGAS shall, except with respect to CONTRACTOR’s obligation to pay Income Tax and
the final tax on profit after tax deductions as set forth in this Section V, assume and
discharge all other Indonesian taxes of Contractor including value added tax,
transfer tax, import and export duties on materials, equipment and supplies brought
into Indonesia by CONTRACTOR, its contractors or subcontractors, ……. “
¾¾ One
OneArgument
Argument: :The
Theterms
termsand
andconditions
conditionsofof PSC
PSC(i.e.
(i.e.85/15,
85/15,70/30
70/30and
andothers)
others)
are
based
on
the
assumptions
that
Contractors
are
not
obligated
to
pay
taxes
are based on the assumptions that Contractors are not obligated to pay taxesand
and
levies
other
than
income
taxes
and
final
tax
on
profit,
as
spell
ed
out
in
the
contract.
levies other than income taxes and final tax on profit, as spelled out in the contract.
¾¾ Another
AnotherArgument
Argument: :Compliance
Compliancewith
withthe
theLaw
Lawand
andprevailing
prevailingregulations.
regulations.

Uniformity
UniformityPrinciple
Principle
‰ Ministrial Circuler (SE-75/PJ/1990, 12 October 1990) affirms KepMen 267:
Costs of obtaining, collecting and maintaining income shall be deemed as costs
computed under the PSC Accounting Procedures (Exhibit “C”).
‰ KepMen 267 :
(1) Contractor Gross Income, consists of :
Cost Recovery
Equity and FTP Share
(-) DMO and (+) DMO Fee
(+/- )Over/Under Lifting
(2) Costs of obtaining, collecting and maitaining income = PSC Operating Costs :
Current Year Non-Capital Costs
Current Year Depreciation of Assets
Prior Year Unrecovered Costs
(3) Taxable Income = (1) minus (2)

PSC
PSCAccounting
Accountingvs
vsGeneral
General Taxation
Taxation (1)
(1)
PSC
PSCAccounting
AccountingProcedures
Procedures

General
GeneralTax
TaxAccounting
AccountingPrinciples
Principles

‰‰ Operating
Operating Costs
Costs computed
computed based
based on
on PSC
PSC
Accounting
Procedures.
Accounting Procedures.

‰‰ Operating
OperatingCosts
Costscomputed
computedas
asspelled
spelledout
outinin
the
theIncome
IncomeTax
TaxLaw,
Law,Article
Article6.6.

‰‰ Pre
-signing contract
Pre-signing
contractcosts
costsare
arenon
nonPSC
PSCCosts
Costs

‰‰ Pre
-establishment costs
Pre-establishment
costs having
having >1
>1 year
year
benefit
shall
be
capitalized
and
amortized.
benefit shall be capitalized and amortized.

‰‰ Intangible
IntangibleDrilling
DrillingCosts
Costsare
arechargeable
chargeablewhen
when
they
incur.
they incur.

‰‰ Costs
Costshaving
havingmore
morethan
than11year
yearbenefit
benefitshall
shall
be
capitalized
and
amortized.
be capitalized and amortized.

‰‰ Crude
Crudeoil
oilsold
soldtotoaffiliates
affiliatesisisvalued
valuedatatICP.
ICP.

‰‰ Crude
Crude oil
oil sold
sold toto affiliates
affiliates isis valued
valued atat the
the
actual
price,
but
tax
office
has
the
right
actual price, but tax office has the right toto
determine
determinethe
thevalue
valuefor
forsales
salestotoaffiliates.
affiliates.

‰‰ Tax
Tax paid
paid monthly
monthly based
based on
on actual
actual lifting,
lifting,
adjusted
at
end
og
March,
the
following
year.
adjusted at end og March, the following year.

‰‰ Tax
Taxdue
dueisispaid
paidno
nolater
laterthan
thanend
endofofMarch
March
the
following
year.
the following year.

‰‰ Unrecovered
Unrecovered costs
costs are
are carried
carried over
over toto
succeeding
succeedingyears.
years.

‰‰ Losses
Lossesmay
maybe
becompensated
compensatedfor
for55years.
years.

‰‰ Financial FinancialReports ReportsininBahasa BahasaIndonesia Indonesiaand andinin Indonesian . approval. deductible. are issued for usage. possible. and tax deductible. ‰‰ Community Communitydevelopment developmentisisnot nottax taxdeductible deductible ‰‰ Interest Interest on on loan loan may may only only be be applicable applicable toto capital capitalinvestment investmentand andrequires requiresapproval. language and in US Dollars currency. ‰‰ Books Books and and Accounts Accounts are are reported reported inin English English language and in US Dollars currency. ‰‰ All Allinterest intereston onloan loanisistax taxdeductible. ‰‰ Depreciation Depreciationstarts startsininthe themonth monthofofpayment payment ororcompletion of assets. ‰‰ Consumable Consumableitems itemsare aredeductible deductiblewhen whenthey they are issued for usage. ‰‰ Revaluation RevaluationofofAssets Assetsisisnot notpossible. be amortized based on unit of production.PSC PSCAccounting Accountingvs vsGeneral General Taxation Taxation (2) (2) PSC PSCAccounting AccountingProcedures Procedures General GeneralTax TaxAccounting AccountingPrinciples Principles ‰‰ Community Communitydevelopment developmentisisnon noncapital capitalcosts costs and tax deductible. ‰‰ Assets Assetsbelong belongtotothe theState. ‰‰ Consumable Consumable items items are are chargeable chargeable when when landed in Indonesia. ‰‰ Depreciation Depreciationstarts startsbeginning beginningininthe theyear yearwhen when an asset is placed into service. entity. landed in Indonesia. an asset is placed into service. State. possible. . ‰‰ Acquisition Acquisition costs costs ofof economic economic interest interest shall shall not be charged to Operating costs according not be charged to Operating costs according totoPSC PSCAccounting AccountingProcedures Procedures ‰‰ Acquisition Acquisition costs costs ofof economic economic interest interest shall shall be amortized based on unit of production . ‰‰ Assets Assetsbelong belongtotobusiness businessentity. IndonesianRupiah Rupiah. ‰‰ Revaluation RevaluationofofAssets Assetsisispossible. completion of assets.