The pdf is now an open standard, maintained by the international organization for standardization. It is particularly common in the middle east and asia. Revenue sharing can exist as a profit sharing system that. It is spread across more than 50,000 square kilometres in the krishna river and godavari river basins in andhra pradesh. 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. In particular, we look at each countrys variation of service contract, and. Nigeria, indonesia, malaysia and equatorial guinea. Model production sharing contract under the petroleum act. The first production sharing contract was signed by iiapco in august 1966, with permina the national oil company of indonesia. 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. Marathon oil occidental omv port harcourt refining company reliance industries.
Nelpi were given limited marketing freedom and were free to. The very first line of a production sharing contract clearly says that by virtue of article 297 of the constitution of india, petroleum is a natural state in the territorial waters and the continental shelf of india is vested. 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. Model production sharing agreement for petroleum exploration. It is a contract that specifies who supplies the production inputs, the quantity of the commodity to be produced and its.
Production sharing agreements versus concession contracts. 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. 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. Introduction 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. Revenue sharing is a somewhat flexible concept that involves sharing operating profits or losses among associated financial actors. Oil and gas in indonesia investment and taxation guide 1 foreword welcome to the 7th edition of the pwc indonesia oil and gas in indonesia investment and taxation guide.
Reliance industries limited and bp to participate across the gas value. 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. Eogil and ril have represented that they have, or will acquire and make available, the. Revenue sharing contract rsc is a term used in the hydro carbon 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 revenue resulting from this effort. Exploration opportunities production sharing contract overview. Implementing production sharing contracts natural resources.
Royalty, therefore, becomes a part of total net revenue of the state from the 1 according to the federal law no. An agreement to share the production or extraction costs between two governments, a government and a corporation, or a corporation and an individual. Since vehicles assembled in canada and mexico are eligible for u. The site is known for the d6 block where reliance industries discovered the biggest natural gas reserves in india in 2003. Competent body represents and warrants that the contract area is free from any encumbrance and burden under the grant of any previous licence to any third party not being a party hereto. What is the difference between a production sharing contract.
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. 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. The fundamental distinction between psc and rt regimes lies in the. A variety of psc terms are designed to encourage an optimal level of investment based on the complexity of petroleum resources. Production sharing agreements versus concession contracts julie ing. Thats why we invented the portable document format pdf, to present and exchange documents reliably independent of software, hardware, or operating system. 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. Production sharing contract free download as powerpoint presentation. Productionsharing agreements psas are among the most common types of contractual arrangements for petroleum exploration and development. 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. Production sharing offers benefits, opportunities and. The reliance industries limited ril was supposed to relinquish 25% of the total area outside the discoveries in 2004 and 2005, as per the production sharing contract psc. Rfp, bidders manual and the responses to the faqs as provided on the ebidding. The contractual form changes between and within countries but the most common contracts are concession contracts and production sharing agree. Request pdf oil and gas service contracts around the world. Production sharing contracts production sharing contract was pioneered in indonesia and was first used in agriculture which was later adopted for the petroleum sector. You know you use pdfs to make your most important work happen. 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. What is the difference between a production sharing. Working in partnership joint venture and production. Production sharing agreements psas or production sharing contracts pscs are a common. Productionsharing contract how is productionsharing. Contract means this production sharing contract, including its recitals and schedules.
Under rsc contracts means naturally occurring hydrocarbons in a free state. May 20, 2014 abstract governments choose among many contracts to delegate the exploration and the extraction of oil. Tariff code 9802, production sharing in auto industry, north american auto industry, production sharing offers benefits, opportunities and challenges. Working in partnership joint venture and production sharing. Contract extension proposed to the minister through bpmigas within 10 to 2 years prior to the original contract expiry date. Associated natural gas or ang means natural gas produced in association with crude oil either as free gas or in solution, if such crude oil can by itself. 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. 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 contract royalty payment petroleum. 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. 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. 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.
Deep offshore and inland basin production sharing contracts decree. Appendix d calculation of the investment multiple for production sharing purposes 105106. However, in these circumstances, the psc parties have the option to propose changing to the grosssplit structure. Contract area means the geographic area within the territory of sao tome and principe which is the subject of this contract and as described in schedule 1, as such area may be amended in accordance with the terms herein. Production sharing contracts as defined in section 18 of this decree. 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. A comparative analysis of production sharing contracts of selected developing countries. Revenue sharing arrangements in production sharing agreements illustrate this point vividly. Sellers are parties to the production sharing contract psc with the.
However, the entire block was declared as a discovery area and ril was allowed to retain it. Delhi high court asks reliance industries, british gas to disclose assets on centre plea 21 dec, 2019, 01. A brief history of petroleum contracts 3 production sharing agreements in general 3. Article 242 of the grosssplit psc regulation provides that for those expiring pscs which are extended, the government may determine the same original cooperation contract or the grosssplit production sharing contract. The fiveday glomacs training course is specifically designed for professionals involved nationally and internationally in the oil and gas industry, it offers a unique opportunity to rapidly increase your understanding of the legal issues involved in production sharing contracts pscs and joint operating agreements joas to in various international scenarios and to improve your techniques. Production sharing contract will be brought into discussion. Production sharing of petroleum between contractor. The parties may place reliance on the actions of socar taken on behalf of. Effective date means the first day of the month next following the month in which this agreement is signed by sonangol and contractor group. A bidder should ensure that its computer is free from viruses. Renegotiation of nigerias production sharing contracts. Professional skaters association rochester, mn, usa psa.
Agreement or the agreement means this production sharing agreement executed between sonangol and contractor group, including its annexes. This decree has been amended by deep offshore and inland basin production sharing contracts amendment decree no 26 of 1999. 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 comparative analysis of production sharing contracts of. How revenue sharing works in practice investopedia. Rfp, bidders manual and the responses to the faqs as provided on the e bidding. An economic analysis kirsten bindemann oxford institute for energy studies wpm 25. The function of stabilisation and renegotiation clauses in. Oil and gas exploration requires substantial investment and the chances of not hitting the reserves are always there. This production sharing contract the contract is entered into in beijing on.
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. Governmentpsus cannot always put in such investments and sometimes also lack the technology and expertise to tap into the reser. 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. Explain the function of stabilisation and renegotiation clauses in production sharing. How to scrutinise a production sharing agreement a guide or the oi and gas sector ased on eerience rom the asian egion 2012. The 7th edition captures the latest tax and regulatory changes that have occurred in the oil and gas industry during the past two years. Production sharing offers benefits, opportunities and challenges. When it involves the period of gas sales agreement which is beyond the efective date of the contract, the extension may be. A psa is an agreement between the parties to a well and a host country regarding the percentage of production each party will receive after the participating parties have recovered a specified amount of costs and expenses. Model production sharing agreement for petroleum exploration and production in turkmenistan part 1. But an industry report said it could be the next decade by the time any new oil or gas is actually. An economic analysis kirsten bindemann oxford institute for energy studies wpm 25 october 1999. Bp and reliance industries announce transformational partnership.
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