The amount of cost coverage by the contractor is calculated on the basis of the price of crude oil in indonesia and the actual price of gas. Once the contractor has recovered all the costs incurred, the government has the right to obtain a certain share of the remaining oil and natural gas production, with the remainder being borne by the contractor under the capital (profits). A construction contract is a legal agreement between the owner and the contractor. Essentially, the contractor agrees to execute the project for payment of a specified nominal amount. Many of these documents are part of the work contracts. Each site manager must be familiar with the contract, as each aspect of the project is controlled on the basis of the market and the contractor`s work is also evaluated on the basis of the design and specifications written on the contract. The contractor submits the first period of POD (development plan) to the Directorate General of Oil and Gas and, for the next POD, BP MIGAS. Under Act 22 of 2001, BP MIGAS is responsible for the performance of the contract. BP Migas is specifically responsible for managing all PSC operations, obtaining the necessary approvals and approvals for the project, and approving the contractor`s work program and budget. Contractors` responsibilities at the COPS SEIN generally provide resources for all activities as well as for the preparation and implementation of work programs and budgets. In return, contractors can absorb and export the crude oil and gas production to which it is entitled.
For contractors, this type of contract guarantees a profit, as much or as little as the cost of work on the project. However, owners are very risky, as there are no limits on project costs and contractors cannot be encouraged to minimize costs. This is why it is very important for the owner to indicate at the outset what fees can be reimbursed and what fees are charged to the contractor. In accordance with the provisions of the FTP, the parties reserve the right to take and receive, per year, according to oil and gas, according to contractual conditions, and total production in each area of education or production, before deducting the reimbursement of operating costs and investment credits. The FTP is generally shared annually between BP Migas and contractors according to a revenue participation standard. On the other hand, if there is an increase in costs that are not related to contractual errors, such as mismanagement, monitoring work or even the weather, food suppliers can suffer huge losses without compensation from the owner.