Development area means the extent of the whole area, within the contract area, capable of production from the deposit or deposits identified in a commercial discovery and defined by agreement between sonangol and the contractor. Maximization of returns and benefits are the major determinants state considers for adopting particular petroleum fiscal regime in the course of exploiting its petroleum resources. In january 2006, the government of timor leste had invited bids for 11 offshore exploration blocks in shallow to ultra deep waters in their country. The preamble expresses a set of general statements and its aim is to arrange the specific provisions of the contract in their broader framework, both legal for instance. However, the entire block was declared as a discovery area and ril was allowed to retain it. This gl o macs interactive training course on working in partnership joint venture and production sharing contract will provide the participants an ideal opportunity to improve and sharpen their skill sets in planning, negotiating and managing production sharing contracts pscs, joint operation agreements joas through interactive session with role playing, case studies, discussion groups. 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 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. Production sharing agreements psas for yemen blocks 34 and 37 were terminated on 5 october 2015. 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. The reliance had entered into a production sharing contract with the government of india for exploring gas in kg basin. 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. Apr 02, 2018 this article explores the history of the production sharing contract and some of the tensions associated with the traditional cost recovery system which contributed to such a radical and unexpected departure to the conventional psc model. The company has withdrawn from license contract and joint operating agreement for exploration and exploitation of.
The parties may place reliance on the actions of socar taken on. 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. Oil and gas in indonesia investment and taxation guide 1. The first production sharing contract was signed by iiapco in august 1966, with permina the national oil company of indonesia. Contract extension proposed to the minister through bpmigas within 10 to 2 years prior to the original contract expiry date. Joint venture agreement jva and production sharing contract psc. An oil exploration and production contract commonly contains three main sections. Read more about production sharing contract extension for barmer likely. 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. But an industry report said it could be the next decade by the time any new oil or gas is actually. The fundamental distinction between psc and rt regimes lies in the. 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.
A variety of psc terms are designed to encourage an optimal level of investment based on the complexity of petroleum resources. 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 will be brought into discussion. 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. Production sharing contracts production sharing contract was pioneered in indonesia and was first used in agriculture which was later adopted for the petroleum sector. Productionsharing contract extension for barmer likely.
It is particularly common in the middle east and asia. Model production sharing contract under the petroleum act. Murphy oil signs production sharing contract for acreage. Canada in 1992, signed a productionsharing contract in thailand, successfully bid to improve oil recovery at a peruvian field in 1993. However, considering the inherent difficulties associated with joint venture agreements, developing countries gave emphasis to production sharing contract. Production sharing contract production sharing agreement. Exploration opportunities production sharing contract overview.
In 2008, indian oil corporation ltd and oil india ltd each bought 12. Read more about productionsharing contract extension for barmer likely. The governments new help policy allows access to all forms of hydrocarbons, marketing and pricing freedom for gas and moving towards an open acreage licensing system. Productionsharing agreements psas are among the most common types of contractual arrangements for petroleum exploration and development. Contract means this production sharing contract, including its recitals and schedules.
The process for signing the contract greatly influences the extent to which peoples voices can be heard. Reliance industries limited ril, today signed a production sharing contract for the offshore contract area k in dili, capital of timor leste. The contractual form changes between and within countries but the most common contracts are concession contracts and production sharing agree. Bp and reliance industries announce transformational partnership. Petroleum production sharing contracts kontratu fahe produsaun petroleu 11 december 2010. 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. This article explores the history of the production sharing contract and some of the tensions associated with the traditional cost recovery system which contributed to such a radical and unexpected departure to the conventional psc model. The preamble, the main text and appendices which are an integral part of the contract. 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. Production sharing agreements versus concession contracts julie ing. Therefore, scrutinising contracts is an important mechanism for. 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. Production sharing contract overview production sharing contracts.
The core issue in both the cases was the widening gap between apm and nonapm pricing, however, in reliance case, it was more of profit intentions. 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. 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 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. How to scrutinise a production sharing agreement a guide or the oi and gas sector ased on eerience rom the asian egion 2012. The claim of the government is based on misreading and misinterpretation of key elements of the. Production sharing agreements psas or production sharing contracts pscs are a common type of contract signed between a government and a resource. However, considering the inherent difficulties associated with joint. Implementing production sharing contracts natural resources. Psc is the acronym of production sharing contract psa may also be used to refer to production sharing agreement. This agreement, made and entered into in baku, the azerbaijan republic, this 4 day of june, 1996. 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.
Business wirejune 8, 2007murphy oil corporation nyse. Natural gas or any combination of these from the contract area excluding. Renegotiation of nigerias production sharing contracts. Working in partnership joint venture and production.
Production sharing agreements psas are among the most common types of contractual arrangements for petroleum exploration and development. 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. A production sharing contract psc is a contract between either a hc or its state oil. A variety of psc terms are designed to encourage an optimal level of investment based on the complexity of petroleum resources malaysia government has recently introduced different tax incentives.
Production sharing contract royalty payment petroleum. Production sharing agreements versus concession contracts. This production sharing contract the contract is entered into in beijing on. Commercial production means production of crude oil or condensate or. 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. 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. 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. Two major fiscal regimes are adopted for exploiting petroleum resources. 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. When it involves the period of gas sales agreement which is beyond the efective date of the contract, the extension may be. Through pscs, our partner bear exploration, development and production costs in return for an agreed share of production.
Anshika ahuja megha gurnani sharmistha ghosh sunanda bishnoi introduction. May 20, 2014 abstract governments choose among many contracts to delegate the exploration and the extraction of oil. 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. 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. Selfreliance in oil became the primary objective of energy policy after the sinosoviet split in 1960 and the withdrawal of soviet advisers. Mur announced today that its wholly owned subsidiary, murphy suriname oil company ltd. A comparative analysis of production sharing contracts of.
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