Agreement or the agreement means this production sharing agreement executed among the government, tpdc and abc, including its annexes. Through pscs, our partner bear exploration, development and production costs in return for an agreed share of production. Production sharing contract will be brought into discussion. Garthdee exploration limited ge is an established north sea oil and gas exploration and production company, with years of experience operating in the uk both onshore and offshore. 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. Production expenditures and operating expenses incurred by licensee in. Production sharing contract in nigeria overview legal. Production sharing contracts as defined in section 18 of this decree. It was first used in 1966 by the indonesias national oil company known as pertamina.
An agreement to share the production or extraction costs between two governments, a government and a corporation, or a corporation and an individual. May 20, 2014 abstract governments choose among many contracts to delegate the exploration and the extraction of oil. Natural gas or any combination of these from the contract area excluding. A read is counted each time someone views a publication summary such as the title, abstract, and list of authors, clicks on a figure, or views or downloads the fulltext. Structure of production sharing contracts the legislative framework is a key component for exploration and development of petroleum reserves through which a government policy with respect to petroleum sector are normally reflected. Guyana government releases exxonmobil contract oilnow. We also have significant experience dealing with the oil and gas legislative environment across africa, including exploration and production rights and all aspects of local regulatory frameworks. A variety of psc terms are designed to encourage an optimal level of investment based on the complexity of petroleum resources. Production sharing agreement a guide or the oi and gas sector ased on eerience rom the asian egion 2012. How to scrutinise a production sharing agreement pubs. This article discusses the main concepts of azerbaijans production sharing agreements psas, which regulate the legal, commercial, and fiscal relationships between the government of azerbaijan and international oil companies iocs. Exploration opportunities production sharing contract overview. Implementing production sharing contracts natural resources. How to scrutinise a production sharing agreement a guide or the oi and gas sector ased on eerience rom the asian egion 2012.
Concept of production sharing contract psc government petronas contractors pda psc entire ownership of nations petroleum resources is vested to petronas. Production sharing contracts service contracts pure service risk service tax and royalty government usually owns minerals in the ground in both types. Our advisory experience covers upstream, midstream and downstream. Renegotiation of nigerias production sharing contracts. 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. When it involves the period of gas sales agreement which is beyond the efective date of the contract, the extension may be. Fiscal challenges of tanzanias production sharing agreements psas zitto kabwe, mp and chairman pac dar es salaam, september 2014 introduction the recent leak of the natural gas terms agreed with statoil exxonmobil is an. International petroleum fiscal systems and production sharing contracts johnston, daniel johnston on. Production sharing contract overview production sharing contracts. Pscpsa product sharing contractagreement concession taxandroyalty participationjoint ventureassociation service contract what is a psca. Production sharing contract royalty payment petroleum.
Application for production sharing agreement to allow horizontal wells to cross lease lines page 1 as of oct 5, 2018. Ogel 1 2005 browse issues journal ogel journal oil. Nigeria, indonesia, malaysia and equatorial guinea. A detailed examination of the issues the sharing of production cost oil and the recovery of petroleum costs profit oil and the sharing of petroleum valuation issues other fiscal terms including production bonuses and taxes the contract area relinquishment the term of the psc and issues of extension. This can be accomplished when two countries agree to allow certain raw materials to be shipped tariff free from the first country to the second country where the materials are. 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.
The production sharing contract psc was widely introduced in 1993 to address some of the issues faced by the joint operating agreement joa and also to provide a suitable agreement structure for encouraging foreign investment in offshore acreage. Contract extension proposed to the minister through bpmigas within 10 to 2 years prior to the original contract expiry date. Appendix a description of the contract area 79 appendix b map of the contract area 80 appendix c accounting procedure to the contract 81104 appendix d calculation of the investment multiple for production sharing purposes 105106 appendix e1 form of parent company financial and performance guarantee 107108. Production sharing contract production sharing agreement. Maniruzzaman, university of portsmouth oil discovery and technical change in southeast asia legal aspects of production sharing contracts in the indonesian petroleum industry r. Production sharing contract psc is simply a contract between a country or its national oil company noc and a foreign oil company foc. The production sharing contracts have been defined as a contractual relationship.
Fiscal regimes, petroleum contracts, and natural gas. Under a psa the state as the owner of mineral resources engages a foreign oil company foc as a contractor to provide technical and financial services. However, in contrast to production sharing contracts, in a service contract the iocs. From the fgns perspective, given that some of these pscs were negotiated and entered into over 20 years ago, there is a need to update them to reflect current realities and also to. An economic analysis productionsharing agreements psas are among the most common types of contractual arrangements for petroleum exploration and development. Prinsip kontrak bagi hasil production sharing contract. Pursuant to the gas agreement, tpdc, with the approval of the ministry, has assigned to panafrican tanzania the exclusive right to operate the contract area on behalf of. Apr 16, 20 company somo and bp iraq nv et al37 as compared to the kurdistan modelproduction sharing contract psc38 it is apparent that the following provisions arecommon to the two forms of contract. 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. An act to, among other things, give effect to certain fiscal incentives given to the oil and gas companies operating in the deep offshore and inland basin areas under production sharing contracts between the nigerian national petroleum corporation or other companies holding oil. Petronas has exclusive rights to exploit nations petroleum resources. Production sharing contract free download as powerpoint presentation. This production sharing contract the contract is entered into in beijing on. Production sharing contract psc is a term used in the hydrocarbon industry and refers to an agreement between contractor and government whereby contractor bears all exploration risks, production and development costs in return for its stipulated share of profit from production.
On monday, 4 november 2019, his excellency, president muhammadu buhari, gcfr, assented to the deep offshore and inland basin production sharing contract amendment act, 2019 the amendment act following its passage by the national assembly in october 2019. Production sharing agreements versus concession contracts julie ing. Model production sharing contract under the petroleum act. The contractual form changes between and within countries but the most common contracts are concession contracts and production sharing agree. Petronas, as a custodian, manages the petroleum resources of the nation. E pursuant to and in accordance with the petroleum law, this contract has been entered into by and between the state and the contractor for the purpose of petroleum operations in the contract area. A comparative analysis of production sharing contracts of. The production sharing agreement psa between the government of guyana and exxonmobil affiliate esso exploration and production guyana limited was released today at a special meeting held at the ministry of the presidency in georgetown, guyana. Production sharing contract overview production sharing contracts through pscs, our partner bear exploration, development and production costs in return for an agreed. The fundamental distinction between psc and rt regimes lies in the.
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. Each involves sharing of proceeds, but by different methods. Production sharing agreements vs service contracts from the. It is a contract that specifies who supplies the production inputs, the quantity of the commodity to be produced and its quality, as well as the producers compensation. Amendment of the deep offshore and inland basin sharing contract act, cap d3, lfn, 2004. State and foreign investors in the form of a production sharing contract, through. 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. In both, the noc is a party representing the hg in the tsc the noc is somodefined as the iraqi state entity. International petroleum fiscal systems and production. Production sharing agreements versus concession contracts.
The deep offshore and inland basin production sharing contract act, cap d3, lfn 2004 in this act referred to as the principal act is amended as set out in this act. This contract is a production sharing contract, in accordance with the provisions herein contained. Fabrikant russias production sharing contract regime s. A comparative analysis of production sharing contracts of selected developing countries. Psc production sharing contract kks kontrak kerja sama pwc pwc, which refers to a network of member firms of pwc international limited, each of which is a separate and independent legal entity. Hydrocarbons law, which allows for agreements to be entered into between the. 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 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.
How to scrutinise a production sharing agreement a guide or the oi and gas sector ased on eerience rom the asian egion. Contractor contract means this production sharing contract, including its recitals and schedules, as amended from time to time through mutual agreement in. Production sharing contracts pscs the pscs are more common in the present day oil and gas contracts, and are being used by at least 60 per cent of oil producing countries. The first production sharing contract was signed by iiapco in august 1966, with permina the national oil company of indonesia. International petroleum fiscal systems and production sharing contracts. While investment flows to the petroleum sector are determined to a large extent by geological prospects, attractive petroleum legislation also has a positive. Productionsharing agreements oxford institute for energy. In a service contract, similar to a production sharing agreement, the closest legal framework, the international oil company brings the technology and makes the upfront capital investment. Subsequently, it will look at the main features of concessions by analyzing the brazilian regulatory framework for oil activities. However, with the low oil price and the declining north sea.
This guide discusses the provisions of a particular type of oil and gas contract, the. Menurut pendapat salim hs, kontrak bagi hasil production sharing contract adalah perjanjian atau kontrak yang dibuat antara badan pelaksana dengan badan usaha dan atau bentuk usaha tetap untuk melakukan kegiatan eksplorasi dan eksploitasi dibidang minyak dan. 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. Commercial production means production of crude oil or condensate or. Show full abstract makes the contracts more flexible, allows to adapt production sharing agreements to any type of fields, to transfer the main economic elements of the contract from the sphere. Doc the key features of the production sharing contract. Model psc under the petroleum act page 2 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. Under these arrangements, the nnpc is the holder of the concession while the ioc is the contractor. From the fgns perspective, given that some of these pscs were negotiated and entered into over 20 years ago, there is a need to update them to reflect current realities and also to ensure that they produce a lot. F insert name is hereby designated as the operator under clause 28 of this contract. Interest owner, do hereby enter into this production sharing agreement agreement concerning their interest in the oil, gas and mineral leases, minerals. Production sharing contracts production sharing contract was pioneered in indonesia and was first used in agriculture which was later adopted for the petroleum sector. Effective date means the first day of the month next following the month in which this agreement. Production sharing agreement psa is a contract between one or more investors and the government in which rights to prospection.
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. Production sharing agreements international monetary fund. 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. Model production sharing agreement for petroleum exploration. Agreement or the agreement means this production sharing agreement executed between sonangol and contractor group, including its annexes. This contract is a production sharing contract, the scope of which is the exploration, appraisal, development and production of hydrocarbons in. Understanding stabilization techniques in production sharing agreements. Effective date means the first day of the month next following the month in which this agreement is signed by sonangol and contractor group. Dpi, guyana, thursday, november 8, 2018 the department of energy is drafting new model production sharing agreements psas for future contracts in the oil and gas industry. The duration of oil prospecting licence relating to in the deep offshore and inland prospecting licence basin shall be determined by the minister and shall be for a minimum period of 5 years and an aggregate period of. Nov 08, 2018 editorial government, ministry of the presidency, news comments off on department of energy designing new model psa.
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