Production sharing contracts production sharing contracts advanced master class dr pedro van meurs is a really excellent instructor having detailed knowledge about the fiscal systems almost in every country in the world. Main differences between concessionary systems and production sharing contracts. A brief history of petroleum contracts 3 production sharing agreements in general 3. The residual share of extracted hydrocarbons shall remain the property of.
The chargeable tax on petroleum operations in the chargeable tax contract area under the production sharing contracts shall be split petroieum between the corporation or the holder and the contractor in the operations. China where state share varies from 5% up to 10,000 bopd to 75% up to 200,000 bopd. Production sharing contracts this course will analyze in depth the key legal, fiscal and commercial aspects of production sharing contracts. This chapter introduces production sharing contract psc revenue distribution with a very simplified, single. Pscs in the oil and gas industries chapter 7 fiscal take provides a general overview of fiscal. Production sharing contracts 2019 the production sharing contract is one of the most significant form of legal contracts agreement to be found in the oil and gas industry. A contractual agreement between a contractor and a host government whereby the contractor bears all of the exploration costs and risks and the development and production costs in return for a stip. Introduction the governments of hydrocarbonproducing countries have utilized a variety of different forms of contracts in their arrangements with domestic and foreign investors in the exploration and development of those resources. Doc production sharing contracts vs service contracts from. The contractor shall a be responsible to the government for the execution of the petroleum operations contemplated hereunder in accordance with the provisions of this contract and is hereby appointed and constituted the exclusive legal entity. Contract means this production sharing contract, including its annexes a and b that are an integral part hereof, as well as any extension, renewal, substitution or amendment of this production sharing contract that may be agreed in writing by the parties in accordance with article 43. Fiscal considerations oxford institute for energy studies. Production sharing contracts production sharing contracts or agreements psc hereafter are ubiquitous in much of asia, africa and the middle east, with only a handful of countries in these regions adopting a royaltytax or concession rt regime or some hybrid.
A comparative analysis of production sharing contracts of. Roughly half of the governments of this world use pscs and the rest use rts. Production sharing agreements international monetary fund. Model production sharing contract under the petroleum act.
Pdf rentierism is a significant concern for most oilproducing countries, in particular, those in the developing world. The most common business structures in the industry today are either production sharing contracts pscs or royaltytax systems rts. Production sharing contract for the subsalt area in brazil. Agreement or the agreement means this production sharing agreement executed between sonangol and contractor group, including its annexes. Production sharing agreement psa is a contract between one or more investors and the government in which rights to prospection, exploration and extraction of mineral resources from a specific area over a specified period of time are determined. Production sharing agreement a guide or the oi and gas sector ased on eerience rom the asian egion 2012. Production sharing contract psc is an arrangement used in the upstream sector for the exploration and development of petroleum resources. Effective date means the first day of the month next following the month in which this agreement is signed by sonangol and contractor group. Background the original act enacted in 1993 old act was. International petroleum fiscal systems and production sharing contracts, tulsa. There are basically two kinds of granting instruments. Chapter 14 complexity and commercial disputes in production.
Production sharing contract, karakteristik production sharing. Unified contract, based on production sharing, does not exist in the world, only a general principle is uniform. Production sharing contracts one form of fiscal system a. Production sharing agreement psa is a contract between one or more investors and the government in which rights to prospection. First used in indonesia in the 1960s, these contracts were a mechanism which, in contrast to the. Productionsharing agreements oxford institute for energy studies. Sovereignty and relationality1 john paterson, university of aberdeen, aberdeen, uk, j. Indonesias new gross split production sharing contracts. This guide discusses the provisions of a particular type of oil and gas contract, the. Ever since its introduction to the indonesian oil industry in 1966, the production. At the end, this dissertation will compare both regimes from a contractual perspective in order to answer whether it is really necessary to adopt a new regulatory framework based on a production sharing contract for the subsalt area in brazil.
Fiscal systems based on production sharing contracts are extremely common in the upstream petroleum industry, particularly in developing countries and some opec countries. However, the emergence of offshore oil and gas operations and the granting of deepwater acreages to the oil producing companies, witnessed a shift from joa regimes to production sharing contracts pscs, with different implications for the operation and regulation of the oil industry in. Fiscal system 1 types of petroleum rights and contracts agreement 1. These complex agreements have often a number of fiscal formulas. When it involves the period of gas sales agreement which is beyond the efective date of the contract, the extension may be. Introductionsince the introduction of the indonesian production sharing contract psc in the 1960s, the modern form psc has gained tremendous momentum 1 especially in developing countries 2 with abundant resources who often times do not have the required skills or technical knowhow to manage exploration and exploitation. Johnston does not concentrate on cultural aspects of a particular country, but rather on the mechanics of the psa and its major issues. Pscpsa product sharing contract agreement concession taxandroyalty participationjoint ventureassociation service contract what is a psca. T o do so, many governments enter into contracts with foreign companies to develop and sell their oil or gas. How to scrutinise a production sharing agreement publications.
Deep offshore and inland basin psc amendment act, 2019. Production sharing contract s0601 for contract area a resource. The chapter examines the concept and some of the mechanisms of production sharing. The contractor shall a be responsible to the government for the execution of the petroleum operations contemplated hereunder in accordance with the provisions of this. The production sharing agreement is a contractual agreement made between a foreign oil company contractor and a designated state enterprise state party, authorizing the contractor to conduct petroleum exploration and exploitation within a certain area contract area in accordance with the rules of the agreement. Concession contracts which include oil and gas leases and. Doc production sharing contracts vs service contracts. Production sharing contracts advanced master class module 1.
How to scrutinise a production sharing agreement a guide or the oi and gas sector ased on eerience rom the asian egion 2012. The deep offshore and inland basin production sharing. Production sharing agreement by grain malunga mineral resources and environmental management expert abstract production sharing agreement psa is a contract entered into between government and a private company wishing to explore, develop and produce petroleum. This means understanding the way they work is crucial to ensure a smooth contract implementation. These agreements are usually longterm, without any mechanism for renegotiations and are shrouded in secrecy and confidential clauses. Contract, klausulaklausula dalam production sharing contract. The government and investor participated at carrying out of production sharing. Contract extension proposed to the minister through bpmigas within 10 to 2 years prior to the original contract expiry date.
The function of stabilisation and renegotiation clauses in. Production sharing agreements psas are among the most common types of contractual arrangements for petroleum exploration and development. Coupled with the bad press associated with the traditional concession. Pdf comparative analysis of three production sharing contract. Hydrocarbons law, which allows for agreements to be entered into between the. Angola where profit sharing varies between 55% up to 25 mm bbl to 19% over 100 mm bbls. Disputes in production sharing contracts james lloyd loftis, robert reyes landicho and francesca fraser i. Licenseconcession agreements, joint ventures, and production sharing agreements jenik radon it is in the interest of natural resourcerich countries to use their resources to obtain funds for social and economic development. Contract psc was introduced in indonesia in 1966 and pscs are now used widely to record arrangements for oil and gas exploration.
This book is an excellent practical tool to gain understanding on how the production sharing contracts agreements of the international oil industry work and how the negotiations on psa normally flow. While these systems are fundamentally different from philosophical and legal. Offshore and inland basin production sharing contract amendment bill 2019. Adln perpustakaan universitas airlangga tesis karakteristik production gultom, dewi wulan s. The residual share of extracted hydrocarbons shall remain the property of the state, to be disposed of as appropriate. An analysis of comparative practice in certain african jurisdictions.
International petroleum fiscal systems and production. Licence andor subject to a petroleum production licence or licences. The fundamental distinction between psc and rt regimes lies in the. Production sharing agreement department of public information. Production sharing agreements psas or production sharing contracts pscs are a common type of contract signed between a government and a resource extraction company or group of companies concerning how much of the resource usually oil extracted from the country each will receive. A service contract is a longterm contractual framework. The purpose of any contract is to establish the rights. Trotman dpi, guyana, friday november 29, 2019 minister of natural resources, the hon. Pdf petroleum production sharing contracts in the middle east.
Effective date means the first day of the month next following the month in which this agreement. Production sharing contract will be brought into discussion. Understanding production sharing contracts opus kinetic. International petroleum fiscal systems and production sharing. The case for publishing petroleum contracts in nigeria. Govt to revise production sharing agreement staff writer november 28, 2017 dpi, guyana, tuesday, november 28, 2017 as guyana embraces its status as an oil producing nation minister of finance, winston. Chapter 2 will give an overview of the concession regime, by first explaining the main features and the main revenues. Production sharing agreements, africa, stateinvestor contracts, oil and gas, relational.
Production sharing contract dated this agreement is a production sharing contract made under the petroleum act between the, acting on behalf of the democratic republic of timorleste the ministry and and each a contractor and collectively, the contractors. When it involves the period of gas sales agreement which is beyond the efective date of the contract, the extension may be proposed at a sooner date. This contract is a production sharing contract, in accordance with the provisions herein contained. In this section we focus on comparing service contracts with production sharing contracts. Background the original act enacted in 1993 old act was introduced to grant certain incentives to companies operating in the deep offshore and inland basin area. Productionsharing agreements psas are among the most common types of contractual arrangements for petroleum exploration and development. This contract is a production sharing contract, the scope of which is the exploration, appraisal, development and production of hydrocarbons in the contract area and the supply of required infrastructure within and outside of the contract area up to the delivery point, all at the contractors sole risk and expense. Service versus production sharing contracts table 1 summarizes some of the differences between four petroleum fiscal regimes.
The government of the united republic of tanzania hereinafter referred to as the government represented by the minister for energy and minerals. A good example is the nnpc and ashland oil contract. For the avoidance of doubt, paragraph 2 of the agreement governs how a sharing wells production. Pdf cost recovery in production sharing contracts marcia. The chargeable tax on petroleum operations in the contract area under the production sharing contracts shall be split between the corporation or the holder and the contractor in the operations. This agreement is a production sharing contract made under the petroleum act.
An example is the kenyan model9 which provides as follows at clause 2. Johnston 1994 presented and investigated the contract elements of psc in detail in. Pdf presentation at pwc kantor pelayanan pajak badan dan. Analyses of production sharing contract and taxation aspects. The intent of this agreement is to govern the allocation of production from the sharing well as it pertains to the leases described on exhibit a and the royalties owed thereunder. In particular, we look at each countrys variation of service contract, and examine how these variations of service contracts are different from each other. Contract area means the area specified in article 3 hereof and delineated on the map set out in annex a, as modified and reconfigured from time to time in accordance with the stipulations of this contract. State and foreign investors in the form of a production sharing contract, through. Sharing contract psc has gained increasing popularity and prominence across. Doc production sharing contracts vs service contracts from the. This thesis will give an overview of the contracts used in brazil for exploration and development. Production sharing contracts production sharing contracts pscs are one of the most common forms of granting instrument between the host government and the investor for exploration, development and production of oil and gas reserves and resources.
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