First implemented in malaysia, the risk sharing contracts rsc departs from the production sharing contract psc first introduced in 1976 and most recently revised last year as the enhanced oil recovery eor psc which ramps up recovery rate from 26% to 40%. Part ii term, exploration, obligations and termination 2 term. Production sharing contract in nigeria overview legal panic. By utilising a powerful economic model, participants will be able to carry out. The model contract for productionsharing agreements in abu dhabi for instance leaves open the payment of various bonuses, royalty, and other financial. Wang et al 2010b modeled the impact of contract elements on psc economics by assuming oil price follows geometric brownian motion.
Model production sharing contract continued under psc, costs classified as exploration, appraisal, capital, operating or decommissioning costs reserve. Sources of potential government revenue 16 1 royalty 16 2 production sharing 17 3 state equity 18. Productionsharing agreements oxford institute for energy. Petronas, as a custodian, manages the petroleum resources of the nation. This contract is a production sharing contract, in accordance with the provisions herein contained. However, in contrast to production sharing contracts, in a service contract the iocs.
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. Together with partners in lower and middleincome countries, iied has been working to strengthen local and national capacity to examine contractual issues with a sustainable development lens. Islamic republic of mauritania honour fraternity justice. 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. Model production sharing contract under the petroleum act. Licence andor subject to a petroleum production licence or licences. Minister is authorized to enter into production sharing contracts for the carrying out of petroleum operations upon such terms and conditions as the cabinet may approve.
State and foreign investors in the form of a production sharing contract. 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. Concept of production sharing contract psc government petronas contractors pda psc entire ownership of nations petroleum resources is vested to petronas. The process for signing the contract greatly influences the extent to which peoples voices can be heard. Model production sharing contract this document is part of the source library for nrgis 2017 resource governance index, a comprehensive measure of the quality of natural resource governance in 81 oil, gas and mineralrich countries. An empirical analysis 5 productionsharing agreements 1966b98 5.
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. Through pscs, our partner bear exploration, development and production costs in return for an agreed share of production. Production sharing contract overview production sharing contracts. Pdf comparative analysis of three production sharing contract. Mar 06, 2019 production sharing contract psc is simply a contract between a country or its national oil company noc and a foreign oil company foc.
A comparative analysis of production sharing contracts of. Contract extension proposed to the minister through bpmigas within 10 to 2 years prior to the original contract expiry date. The purpose of this paper is to model chinas offshore production sharing contracts using a probabilistic approach. Production sharing contract contractor meets all costs petroleum shared when produced 1. Model production sharing contract datasets resourcedata. Operations in furtherance of a production sharing contract entered into between themselves and the state pursuant to the provisions of the petroleum. Production sharing contract in nigeria overview legal. Renegotiation of nigerias production sharing contracts. Petronas has exclusive rights to exploit nations petroleum resources.
A variety of psc terms are designed to encourage an optimal level of investment based on the complexity of petroleum resources. Production sharing systems 11 the model production sharing agreement 12 contract negotiations 12 the signed psas 12 may 2014 6. Production sharing contract royalty payment petroleum. Abbreviations 4 preamble 5 article 1 definitions 6 article 2 scope 12 article 3 contract area article 4 contract term 14. Exploration opportunities production sharing contract overview. 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.
Production sharing agreement department of public information. 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 contractor s sole risk and expense. Petroleum licenses and production sharing agreements 10 5. 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. Productionsharing agreements psas are among the most common types of contractual arrangements for petroleum exploration and development. The first and the most important feature of a psc is that the title of the oil and gas remains with the state and not the ioc. Nov 08, 2018 editorial government, ministry of the presidency, news comments off on department of energy designing new model psa. Fiscal regimes, petroleum contracts, and natural gas.
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. Modeling chinas offshore production sharing contracts using. Under these arrangements, the nnpc is the holder of the concession while the ioc is the contractor. 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 for exploration and development operations. Production sharing agreements psas 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. Agreement or the agreement means this production sharing agreement executed between sonangol and contractor group, including its annexes. Modeling chinas offshore production sharing contracts. Production sharing contract will be brought into discussion. 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.
Production sharing contract free download as powerpoint presentation. 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 fundamental distinction between psc and rt regimes lies in the. Pdf on sep 1, 2014, ayub ali and others published comparative analysis of three production sharing contract model find, read and cite. Two major fiscal regimes are adopted for exploiting petroleum resources. The date of discovery of a commercial oil well is the date on which such well is tested and completed according to the above. Revenuesharing arrangements in production sharing agreements illustrate this point vividly. 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. Psc is an agreement between the parties to a well and a host country regarding the percentage of oil and gas production each party will receive after the participating parties have recovered a specified amount of costs and expenses. An empirical analysis 5 production sharing agreements 1966b98 5. 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. Petroleum industry production practices, and verified by egpc, is found to be capable of producing at the average rate of not less than two thousand 2000 barrels of oil per day bopd.
Effective date means the first day of the month next following the month in which this agreement is signed by sonangol and contractor group. And whereas, the commissioner of state lands has the requisite authority to sign this contract on behalf of the president of the republic of trinidad and tobago. Therefore, scrutinising contracts is an important mechanism for. However, considering the inherent difficulties associated with joint venture agreements, developing countries gave emphasis to production sharing contract.
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