Презентация на тему Production Agreements, Oil Service Contracts & Joint Ventures

between an oil company and government of a country

stipulating the oil company bear responsibility for exploration and production. On successful production, the oil company would be expected to take the cost oil (for equity and operational expenditure), while the remaining would be identified as profit oil (for sharing between government and oil company at a specified ratio). The oil company shall bear the investment risk.

types of contractual arrangements for petroleum exploration and development.

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. The state is traditionally represented by the government or one of its agencies such as the national oil company (NOC). The FOC acquires an entitlement to a stipulated share of the oil produced as a reward for the risk taken and services rendered. The state, however, remains the owner of the petroleum produced subject only to the contractor's entitlement to its share of production. The government or its NOC usually has the option to participate in different aspects of the exploration and development process. In addition, PSAs frequently provide for the establishment of a joint committee where both parties are represented and which monitors the operations.”

Source: Kirsten Bindemann, Production Sharing Agreements: An Economic Analysis

apportioned in accordance with tenets and stipulations of production

sharing contract.

Cost Oil (To Oil Company For Expenditure)
+
Profit Oil (To be Shared btw Govt and Oil Company)

Cost Oil (To Oil Company For Operation Cost)
+
Equity Oil (To Oil Company For ROI)
+
Profit Oil (To be Shared btw Govt and Oil Company)

Total Produced Oil =

Total Produced Oil =

Format A

Format B

Petroleum Development

Commerciality
Domestic Market Obligation
Work Programme
Local Content
Participation
Duration of Contract

Based Cost Oil
Unlimited Cost Oil
R-Factor refers to Ratio of

Cumulative Receipts to Cumulative Expenditure
R-Factor = Cumulative Receipts Cumulative Expenditure

Bonus
Discovery Bonus
No Discovery Bonus

Oil
R-Factor Based Profit Oil

Reward
Influence
Negotiation Competence
Brand Value
Bilateral Intergovernmental Treaties
Bargaining Power
National Legal Provision
Former Relationship

Leverage

Exploration, Development & Production
Size of Resource at Site
Commercial Feasibility
Status

of Deposit as Oil or Gas
Finding Additional Fields
Change in Local Law
Political Instability
Technology Required
Disenfranchisement of Operating Community
Price Fluctuation

Oil Company
Government
International Oil Company
National Oil Company
Very Complex
Government
NOC
Regulatory Dept.
International Oil

Company

to have greatest control of the oil and only

assign work to contracting firm. The Host Government must have the following:
Technological know-how and do-how
Financial Capacity

Service Without Bearing Any Risk
Lean Scope
Contracting Firm cannot have

interest in the oil

Pure Service Contract (PSC)
Provision of Service Without Bearing Risk
Can have Broad Scope
Compensation to Contractor can be Cash or Oil

Risk Service Contract (RSC) aka BOOT
Provision of Service with Great Risk: Failure to Get Exploitable Discovery Imply Lost Fund while Positive Discovery Means Compensation & Possibility of Equity Option.
Can have Broad Scope
Provision of Great Flexibility to Host Government

governance forms of several partnering organizations, making them mutually

interdependent.”
Source: Inkpen

R & D
Preferred Suppliers
Co-Marketing
Joint Production
Equity Joint Ventures
Mergers & Acquisition
Full Integration
Alliance
Market Exchange
Minority Investment
Types of Inter-Firm

Relationships

Outsourcing

Alliances
Joint R & D
Preferred Suppliers
Co-Marketing
Joint Production
Equity Joint Ventures
Minority Investment
Outsourcing
Duration of Commitment
Extent of

Joint Decision-Making

Long

Short

None

High

Source: Elijah Ezendu, Alliance Development

The Region of Apex Alliances

Joint Venture: This involves venturing parties (namely Government and

IOC) working together by means of Joint Operating Agreement wherein each shall be entitled to production share.
Secondary Form of Joint Venture: Herein, the Government and IOC shall be held together in that venture by equity. Today’s global practices show Governments prefer to hold majority instead of equal share.

Profit Oil
Royalty
IOC share
Govt

Share from PO

IOC After-Tax Share

Tax

Total IOC Share

Total Govt Share

Production

Cost Oil

Profit Oil

Royalty

JV share

Govt Share from PO

IOC Share

Govt Share from JV

Total IOC Share

Total Govt Share

IOC After-Tax Share

Tax

communities spurred regional governments to take action with the

intent of controlling available mineral resources including oil and gas.

market has sent shock waves throughout Iraq's energy sector

and its political classes. The presence of one of the world's largest international oil companies (IOCs) in the Kurdistan Region not only challenges central government authority but gives the Kurdistan Regional Government (KRG) greater leverage in developing its own oil market. More super-major IOCs are likely to follow, which will further enhance the recognition and financial rewards for the KRG and its business partners.”

Source: Denise Natali, The Politics of Kurdish Crude, Middle East Policy Council

Host Government and International Oil Company.
Production Sharing Agreements
Joint Venture
Pure

Service Contracts