Initial exploration phase means the period of xx x contract years commencing on the effective date of the contract, as defined in article 6. The fundamental distinction between psc and rt regimes lies in the. On structuring offshore hydrocarbon production sharing. Exploration, development and production of liquid and gaseous hydrocarbons in the contract area. Falcon oil and gas on its application for an exploration. By definition, a production sharing contract psc, or 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. 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. Under this policy the nigeria national petroleum corporation nnpc a governmental agency engages a competent contractor petroleum exploration and production companies or its subsidiary duly registered. T o do so, many governments enter into contracts with foreign companies to develop and sell their oil or gas. Production sharing contract in nigeria overview legal panic. The nation shall also own any geological or mineral sample or sample of any. Production sharing contract block l16, ministry of energy page 1. Whereas, the constitution further provides that the state may directly undertake such activities, or it may enter into a co production, joint venture, or mineral production sharing agreement with filipino citizens, or cooperatives, partnerships. Production sharing contract in nigeria overview legal.
Model production sharing agreement for petroleum exploration and. Psc and psa for production sharing agreement are commonly used interchangeably in the literature. Production sharing agreements psas are among the most common types of contractual arrangements for petroleum exploration and development. Therefore, in consideration of the undertakings and covenants herein contained, the parties hereby agree as follows. Purpose the aim of this research is to analyze the feasibility of developing a real oil field in africa under a production sharing agreement, through the application of the real options theory. This agreement made and entered on this day of, 20, by and between. Exploration operations conducted to facilitate the. Oil and gas exploration and production contracts in nigeria. Angola where profit sharing varies between 55% up to 25 mm bbl to 19% over 100 mm bbls. The contract area that is the subject matter of this agreement has been declared open for petroleum operations by the minister, and the state desires to encourage and promote exploration, development and production within the. Apr 20, 2015 the regimes developed to govern the relationship between the state and the ioc can, in general terms, be classified as licences, concessions, production sharing agreements psas and service contracts. Whereas in accordance with the petroleum exploration and production act cap 308.
Agreement related to petroleum exploration, appraisal, development and. Phase means the initial exploration phase or the optional exploration phase, as the case may be. They may be used as a model for government contracts in a particular jurisdiction but they are not always widely accepted and used in other countries, even though some countries have cooperated with each other. Under a psa, an oil company carries most financial risks of exploration and development. This exploration and production sharing agreement petroleum agreement is made on the 27th day of august 2008. This production sharing agreement agreement is made on 20. Model psc 4 february 2007 article 1 scope and definitions 1. Conclusion production sharing agreements are a modern means of entering into agreement between state and investment companies in exploring, development and exploitation of oil and gas for the benefit of the two parties while understanding that the resources belong to the people. Agreements, joint ventures, and production sharing agreements jenik radon it is in the interest of natural resourcerich countries to use their resources to obtain funds for social and economic development. Production sharing agreements and allocation wells update. License and exploration period relinquishment work programme management committee operatorship, joint operating agreement and operating committee general rights and obligations of the parties government assistance discovery, development and production petroleum exploration license and lease unit development measurement of petroleum.
Request pdf on structuring offshore hydrocarbon production sharing contracts. International petroleum exploration and exploitation agreements. 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. An empirical analysis 5 production sharing agreements 1966b98 5. Exploration and production sharing contract indicate the name of the permit ng4indicate the number between the gabonese state, represented by.
International petroleum exploration and exploitation. Lebanons case interest in the lebanese offshore hydrocarbon potentials has recently increased, especially after. It aims to explain to governments, communities, citizens and local companies how and to what extent they can expect to benefit from the oil and gas industry. Apr 07, 2018 concession agreement for petroleum exploration and exploitation between the arab republic of egypt and the egyptian general petroleum corporation and in area a. Coupled with the bad press associated with the traditional concession.
China where state share varies from 5% up to 10,000 bopd to 75% up to 200,000 bopd. Reserve estimates are a major driver of value for exploration and production companies. Jan 12, 2016 production sharing agreement psa is a form of an agreement under which the state retains ownership of the resources but permits foreign corporations to manage and operate the development of the oil field, thereby negotiating a profit sharing system. Mar 06, 2019 the duration of a production sharing contract in nigeria is for a thirty 30 year period commencing from the date of the psc, the thirty years period is divided into two terms often 10 years for exploration activities also called the exploration phase and twenty 20 years for production of the petroleum products also called the production. Part v work programme, development and production 18 exploration work programme. Royalty, therefore, becomes a part of total net revenue of the state from the 1 according to the federal law no. Exploration and production sharing agreement blogs, comments and archive news on. Contract psc was introduced in indonesia in 1966 and pscs are now used widely to record arrangements for oil and gas exploration and production, particularly. 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. Agreement or the agreement means this production sharing agreement executed among the government, tpdc and abc, including its annexes. Form of company financial and performance guarantee. P and, xxxxxxx xxxxxxxx xxxxxxxxx xxxxxxxxxxx in the. By and between joint exploration, exploitation and petroleum services company hereinafter referred to as joint oil or first party, a company established by virtue of the. This mineral production sharing agreement the republic of the.
Exploration and production act 1980 the act makes provision with respect to exploring for and producing petroleum. In production sharing agreements the countrys government awards the execution of exploration and production activities to an oil company. Understanding production sharing contracts opus kinetic. Oil and gas management is very significant to the parties involved in the exploration process.
Exxonmobil in the negotiation and drafting of a farmin agreement in south africa, together with advice on regulatory approval processes and fiscal stability agreements. Model contractssurvey of global petroleum industryfinal. The model production sharing agreement for petroleum exploration and production in turkmenistan the model psa approved by the petroleum law implementing decree on june 6, 1997, cannot be characterized as either law or regulation. One of the main purposes of the production sharing. Minimum exploration work and expenditure obligations 6. C the federal government wishes to promote and support the exploration and development of petroleum throughout the contract area and for that has run a tender process insert details. An application of the principalagent model appendix 4. Name n g4 xxx exploration and production sharing contract. However, in contrast to production sharing contracts, in a service contract the iocs agree to a predetermined return in lieu for sharing profit oil. Exploration and production sharing agreement latest breaking news, pictures, videos, and special reports from the economic times. The sharing in production sharing contracts extends beyond oil and gas. This policy is mainly regulated by the deep offshore and inland basin production sharing contract act, laws of the federation of nigeria 2004. Scope this contract is a production sharing contract, the scope of which is the exploration.
Concession arrangement, the hc grants the focs exclusive production rights. Introductionsince the introduction of the indonesian production sharing contract psc in the 1960s, the modern form psc has gained tremendous momentum 1 especially in developing countries 2 with abundant resources who often times do not have the required skills or technical knowhow to manage exploration and exploitation. The regimes are actually similar in that they all require the ioc to shoulder exploration costs and risks. Production sharing agreements practice and trends energy. A proposed model production sharing contract for the kurdistan region in iraq. Falcon oil and gas on its application for an exploration right to explore for shale. 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. One of the main purposes of the production sharing contract system is to exert state control over the. Pdf feasibility analysis of an oil field development. Pdf production sharing agreement grain malunga academia.
The early concession system gave the host government no say in the exploration and production program. Somewhat unfortunately, they are also often used as a sort of short reference to virtually any type of agreement involving production sharing regardless of the form that sharing takes. Production sharing contract in the nigerian oil and gas. In the oil and gas production sector, different forms of contracts exist the main types being, concession agreements and production sharing agreement. Model production sharing agreement pakistan petroleum. Exploration and potential production of petroleum in the contract area. The oil company bears the mineral and financial risk of the initiative and explores, develops and ultimately produces the field as required.
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