GENERAL

- PETROLEUM ACCOUNTING PRINCIPLES

- INDONESIAN PSC ACCOUNTINGINDONESIAN PSC ACCOUNTING
PETROLEUM ACCOUNTING PRINCIPLES

Prior to petroleum accounting principles, we need to know in general the accounting

principles contained in the General Accepted Accounting Principles (GAAP) or the
International Financial Standard Report (IFRS).
in Indonesia it is called Pedoman Standar Akunatnsi Keuangan (PSAK) Indonesia.
The 10 principles of accounting standards
1. Regularity 6. Prudence
2. Consistency 7. Continuity

3. Sincerity 8. Periodicity
4.Permanence of Methods 9. Materiality
5, Non-compensation 10. Utmost Good Faith
U.S. companies follow one of two methods of financial accounting for petroleum
E&P
activities:
1. successful efforts or full cost.
2. The successful efforts method has only the cost of successful efforts capitalized as
oil and gas properties.

Costs of exploratory dry holes, geological and geophysical (G&G) costs in general,
delay rentals, and other property carrying costs are expensed. The net unamortized
capitalized costs are also amortized on unit-of-production methods whereby property
acquisition costs are amortized over proved reserves and property development costs
are amortized over proved developed reserves.
Amortization is computed by lease (or property) or certain aggregations of properties
as large as a field.
In Indonesia, the principles of petroleum accounting are based on PSAK
29.
Which is a confenssion of progress for the oil and gas accounting
system, we hope that harmony will be created and alignment of the
behavior of the parties involved in the process of preparation,
presentation and examination of the financial statements. In addition to
the Accounting system serves as a frame of reference for assessing and
developing practices sound accounting practices for the Indonesian oil
and gas industry in these the future, taking into account the influence of
technological advances oil and gas sector.
Indonesian PSC AccountingIndonesian PSC Accounting
To understand PSC Accounting Indonesia, the picture
below can be used as the beginning of our learning. Various
versions of the term continued to evolve, but the basic
accounting principles are still identical today. In the future,
this PSC accounting principle does not rule out the
possibility of changes following the rules set by the
Government of Indonesia.
In general, from the point of view of PSC Accounting, business activities in the Oil and Gas industry in
Indonesia are grouped into 2, namely Routine activities and Non-Routine activities or referred to as
Projects. This grouping is intended to make it easier for Regulators (namely BPMIGAS) to carry out
Planning, Budgeting, Controlling, Reporting and Analysis of all PPP activities in Indonesia.

From a Budget point of view, Routine activities are budgeted in the form of WP&B (Work Program &
Budget). Meanwhile, non-routine activities/projects are budgeted in the AFE (Authorization For
Expenditure) format. The WP&B and AFE budgets are submitted by the KPS to BPMIGAS for analysis
and approval as the basis for the KPS activity plan and budget.

From a Reporting point of view, Routine activities have 17 different types of reports. Please see in the
image in the left column. Starting from Report Schedule 1 to 17. While Non-Routine activities have 13
types of reports, ranging from Report Schedule 18 A to 26. Reporting on Non-Routine activities is also
part of the WP&B Report Schedule, explained in the Capex/Opex session below.
As with general accounting terms, PSC accounting also
classifies costs in 2 categories CAPEX and OPEX. Capex or
Capital Expenditure is a grouping of costs which will
eventually be capitalized (the amount in the expense account
is posted as Fixed Assets). This capitalization is carried out if
certain conditions are met, for example the project is
complete and PIS (Place Into Service). Meanwhile, Opex or
Operating Expenditure is a group of transactions that will
forever be reported in a cost account. Amounts in this Opex
category are not capitalized.
From the Capex / Opex point of view, the Project / AFE activities are divided into 7 groups, divided into 5
Capex groups and 2 Opex groups. Capex group namely;

1. Seismic & Survey is sourced from Report Schedule 18 A, 18 B, and 18 C. Please note that this Seismic &
Survey group is summarized in the WP&B Report Schedule 4.
2. The Geological & Geophysical Study originates from Report Schedules 18 D and 18 E. It should be noted
that the G&G Study group is summarized in the WP&B Report Schedule 4.
3. Drilling is sourced from Report Schedules 19 and 20 which relate to Drilling costs only. It should be noted
that this Drilling group is summarized in the Tangible group WP&B Report Schedule 4.
4. Facilities originate from Report Schedules 21, 22, 23, 24, and 25. Please note that this Facilities group is
summarized in WP&B Report Schedule 8.
5. Other Project Capex is sourced from Report Schedule 26 whose costs are capitalized. It should be noted
that the Other Project Capex group is summarized in WP&B Report Schedule 8 or 11 depending on the
type of project, but keep in mind that these costs are capitalized. Details will be explained in the next
session.

While the Opex group consists of (1) Work Over which originates from Report Schedules 19 and 20 which
are related to Work Over costs only. Please note that the Work Over group is summarized in the WP&B
Report Schedule 4 Intangible group. (2) Other Project Opex sourced from Report Schedule 26 whose costs are
not capitalized. Please note that the Other Project Opex group is summarized in WP&B Report Schedule 8 or
11 depending on the type of project, but keep in mind that these costs are not capitalized
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