Duval - Production Sharing Agreements

full all chapter5 chapter6 chapter7 chapter8 chapter9

chapter4 chapter5 chapter6 chapter7 chapter8 chapter9

Transparency and Accountability

Policy, Legal and Contractual Framework

Sector Organization and Institutions

Fiscal Design and Administration

Revenue Management and Distribution

Sustainable Development

Duval, C., Le Leuch, H., Pertuzio, A., and Weaver, J., Production Sharing Agreements (chapter 6), in International Petroleum Exploration and Exploitation Agreements: Legal, Economic and Policy Aspects, (New York: Barrows Company Inc., 2nd edition, 2009)

The authors remark that PSAs as legal instruments defining the relationships between the host countries and the international oil companies are more popular in developing countries and newly opened countries. Under this type of agreement the international oil company carries out the petroleum operations in a certain area under the supervision of the host country or its national oil company but at its own risk. When petroleum is produced, it belongs to the host country with the exception of a share of production that is to be taken in kind by the international oil company for cost recovery and for profit sharing. After cost recovery, the balance of production is shared based on a predetermined percentage split between the host country and the international oil company. The net income of the international oil company is usually taxable and the equipment and installations are the property of the host country, either immediately or over time, in accordance with the cost recovery schedules.

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