Cost Control and Cost Reduction in the Upstream PSC Business Activity

OVERVIEW

The Focus of Cost Control is to make sure and see if the plan-program is done accordingly or if it has a difference, then we have to find out why. Cost reduction may be needed when the actual cost is under the budget soon after closely analyzing and matching: the number-volume-quantity; timing phase; and dollar difference. Internal Control implementation must be from “the top management”, the President & CEO of the company shall be the first person who shall declare the need for a “good governance” solution. Whenever Top Management clearly instructed that the company’s operations and activities must reflect business performance, then all executive management underneath will case down to the lower level of organization of the company for proper implementation.

The Control is intended to assess and test the performance of the company at all levels of transactions in each section of the functional organization. Upon the assessment and testing management will take action to cut the budget, which means a cost reduction opportunity, revision of the budget means appreciating current performance and correcting for the next periods of operations. The weakest Control, as an example was experienced by Enron Company in the USA triggered the government agencies (Committee Of Sponsoring Organizations – COSO), SEC to recommend that Internal control must be the responsibility of the top management focus on Control environment; Risk Assessment, Control activities, Monitoring, and Information-communication phases, specifically on the information and communication must be “top-down and bottom-up” of all business activities will eliminate such Enron’s case.

OBJECTIVES

This training course will provide information, and tools to the participants on the urgency of good control-internal control has achieved reference that the company has run its operations effectively and efficiently per and in compliance with company policies and procedures, PSC Agreement, BPMIGAS budgeting procedures, and financial manual procedures, system operating procedures, Indonesian’s tax laws, and other decrees that may be interrelated to PSC operations.

TARGET PARTICIPANTS

• Operating managers
• Field personnel
• Project managers
• Technology managers
• Budget managers

COURSE CONTENTS

• PSC Agreement as a legal base of business operations or activities of the oil & gas industry
• POD
• WP&B
• AFE
• Participating Interest
• Oil reserves
• Gas reserves
• Exploration Drilling Expenditures
• Development Drilling Expenditures.
• Completion Drilling Expenditures
• Production Costs
• Inventory
• Cost Recovery
• Interchangeable costs between Oil and Gas costs
• Interchangeable between administrative and capital investment
• Sharing costs and revenues between the government and the PSC company
• Reflection of good cost Control will reduce cost
• Reflection of good control to tax liability: Corporate Income Tax and withholding taxes
• Closing Summary