Production sharing agreements versus concession contracts. Liberia and its longterm prospects for lasting peace and democracy. Production sharing contract in nigeria overview legal. The postelection period presents challenges as well as opportunities for liberia and the interna tional community. Whereas, article 7 of the constitution of the republic of liberia provides. An application of the principalagent model appendix 4. It is a service contract whereby the holder is entitled to a portion of the production of. An act to ratify the concession agreement between the republic of liberia and western cluster limited, sesa gao limited, bloom fountain.
This template does not, and is not intended to, provide legal advice. Petronas has exclusive rights to exploit nations petroleum resources. The contractual form changes between and within countries but the most common contracts are concession contracts and production sharing agree. Contract extension proposed to the minister through bpmigas within 10 to 2 years prior to the original contract expiry date. 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. Contract means this restated and amended production sharing contract and its annexes forming an integral part hereof. Production sharing a percentage of gross production is set aside for the recovery of costs cost oil remaining production profit oil is shared between the investorcontractor and government or its agent based on a percentages fixed or negotiated between government and the contractor. Summary of mexicos productionsharing contract terms for. John paterson this paper considers destas critique of how contracts in the extractive industries involving host nations in subsaharan africa and international companies have been drafted and adjudicated. Liberia does not have a welldeveloped upstream oil and gas industry. And xyz company, a company incorporated under the laws of hereinafter referred.
The production sharing contract psc was widely introduced in 1993 to address some of the issues faced by the joint operating agreement joa and also to provide a suitable agreement structure for encouraging foreign investment in offshore acreage. Original contract means that certain production sharing contract, entered into by the. An act to regulate the operation of petroleum industry in liberia and all. Comparison of major contract types under secretary of. Concession agreement between the republic of liberia and the liberia company signed december 22, 1949.
The movement for democracy in liberia model was a rebel group in liberia that became active in march 2003, launching attacks from ivory coast. Sources of potential government revenue 16 1 royalty 16 2 production sharing 17 3 state equity 18. A comparative analysis of production sharing contracts of. Concept of production sharing contract psc government petronas contractors pda psc entire ownership of nations petroleum resources is vested to petronas.
The state assures contractor that all of the contract area is. This is a sample template for an energy performance contract epc. The contractor shall a be responsible to the government for the execution of the petroleum operations contemplated hereunder in accordance with the provisions of this. A pdf reader is available from adobe systems incorporated. 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. Republic of liberia, model production sharing contract, october 2007, art 16. Exxonmobil exploration and production liberia limited a company registered in the bahamas. The case for publishing petroleum contracts in nigeria. A brief history of liberia international center for.
Production sharing contract will be brought into discussion. We start with the concept of the production sharing contract in liberia being not only a contract but also being a law. 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. Liberias oil block bid round natural resource governance. A cost contract is a costreimbursement contract in which the contractor receives no fee. Contract or the contract means this production sharing contract executed between sonangol and contractor group, including its annexes. Background briefing on liberias oil sector july 2012. It then examines the extent to which these contracts are best understood as relational in nature and concludes by proposing the development of principles to guide arbitral adjustment of contract terms based on this observation. 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. Resource ownership national petroleum policy for liberia national petroleum policy for liberia. By utilising a powerful economic model, participants will be able to carry out. Production sharing agreements, africa, stateinvestor contracts, oil and. A variety of psc terms are designed to encourage an optimal level of investment based on the complexity of petroleum resources.
Production sharing contract psc is simply a contract between a country or its national oil company noc and a foreign oil company foc. 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. Purchase agreement gspa which shall be used as the template for a. In this article, sample clauses from fortyone upstream oil and gas.
Contracts and concessions liberia extractive industries. Production sharing agreements, africa, stateinvestor contracts. Company act of 2000, the petroleum law of 2002, the oil revenue framework, and the model production sharing contract. Production sharing contract between the republic of liberia and hongkong. Effective date means the first day of the month next following the month in which this agreement. Oil company of liberia responsible for the administration of petroleum operations in liberia. Production sharing systems 11 the model production sharing agreement 12 contract negotiations 12 the signed psas 12 may 2014 6. Nocal approves revised production sharing contract for block. Mineral development between the government of liberia and bea mountain signed on november 28, 2001. Productionsharing agreements psas are among the most common types of contractual. Production sharing contract between the republic of liberia and. Summary of mexicos production sharing contract terms for shallow water areas the mexican national hydrocarbons commission cnh has published the model production sharing contract for the first phase of mexicos round one bid process relating to 14 contract areas in shallow waters. Nov 08, 2018 editorial government, ministry of the presidency, news comments off on department of energy designing new model psa. When it involves the period of gas sales agreement which is beyond the efective date of the contract, the extension may be.
Draft and enact a new petroleum law, guided by the new policy, to cover exploration and production. Tax level is 44% investment credit is considered as a part of. This article looks at a new model of production sharing contract, which was developed as part of a recent transaction whereby canadian overseas petroleum. The reforms are conducted under the hydrocarbon technical committee htc, so it is an inclusive process and not nocal acting alone. 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. Tubmans open door economic policy brought a great deal of foreign investment at heavy price, as the divide widened between the prospering americoliberians benefiting from such investment and the rest of the. Cnh published one contract form for individual contractors and.
Nigeria, indonesia, malaysia and equatorial guinea. Republic of liberia, and is used for making disbursements, or any successor general revenue account maintained by the ministry of finance. Under liberian law, as in a number of other african countries, a production sharing contract has to be approved by the legislature and become a law before it comes into force. This inevitably makes any contract governed by local law such as a production sharing contract subject to limited precedent on how particular provisions may be interpreted under liberian law. Liberia recently announced it is conducting a competitive bid round for exploration and. An empirical analysis 5 production sharing agreements 1966b98 5. The full text of any contract, concession, production sharing agreement or other agreement granted by, or entered into by, the government which provides the terms attached to the exploitation of oil. Under these arrangements, the nnpc is the holder of the concession while the ioc is the contractor.
A cost contract may be appropriate for research and development work, particularly with nonprofit educational institutions or other nonprofit organizations, and for facilities contracts. Exploration opportunities production sharing contract overview. Article ii annexes to the agreement annex a is a description of the area covered and affected by this agreement. 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. Production sharing contract overview production sharing contracts. Production sharing contract psc for block lb offshore liberia has been agreed with exxonmobil exploration and production liberia limited exxonmobil and the national oil company of liberia nocal. Production sharing agreement a guide or the oi and gas sector ased on eerience rom the asian egion 2012. The other is the contract for building energy audit and project proposal. A comparative analysis of production sharing contracts of selected developing countries. As liberians look forward to the necessary reforms in this regard, it must be our prayer that our. Sample psa cash flow with volumebased sliding scale. To advance democratic consoli dation, the carter center recently proposed a multifaceted program to monitor governmental. 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. Mar 08, 20 production sharing contract psc for block lb offshore liberia has been agreed with exxonmobil exploration and production liberia limited exxonmobil and the national oil company of liberia nocal.
Agreement or the agreement means this production sharing agreement executed between sonangol and contractor group, including its annexes. Effective date means the first day of the month next following the month in which this agreement is signed by sonangol and contractor group. Itfirst sets out the options that the state has in setting out a. Petronas, as a custodian, manages the petroleum resources of the nation. How to scrutinise a production sharing agreement a guide or the oi and gas sector ased on eerience rom the asian egion 2012. Model production sharing contract under the petroleum act. Pdf many countries around the world are dependent on oil and gas. 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 contract area. Pdf the most appropriate upstream contract for developing. Production sharing contract production sharing agreement. Productionsharing agreements oxford institute for energy.
Dpi, guyana, thursday, november 8, 2018 the department of energy is drafting new model production sharing agreements psas for future contracts in the oil and gas industry. Summary of mexicos productionsharing contract terms for shallow water areas the mexican national hydrocarbons commission cnh has published the model productionsharing contract for the first phase of mexicos round one bid process relating to 14 contract areas in shallow waters. This article looks at a new model of production sharing contract, which was developed as part of a recent transaction whereby canadian overseas petroleum bermuda limited coplb and exxonmobil. Create a new model production sharing contract that reflects the new law. This contract is a production sharing contract, in accordance with the provisions herein contained. Production sharing contract between the republic of liberia, state represented for the purposes of this contract by the national oil company of liberia nocal, a company incorporated under the laws of liberia. Nocal approves revised production sharing contract for. Model contractssurvey of global petroleum industryfinal. The epc is one of two typical contracts that the ppesco enters into with the client. Renegotiation of nigerias production sharing contracts. Company act of 2000, the petroleum law of 2002, the oil revenue framework, and the model production sharing contract psc. Commercial production commencement date means the date on which the first regular shipments of crude oil or first regular deliveries of gas are made.
In 1971, william tubman, liberias president of 27 years, died while in office. Fiscal regimes, petroleum contracts, and natural gas. Petroleum agreements, and licenses for petroleum transportation systems. Upstream production tends to be subject to more complex fiscal terms bonuses, royalty, production sharing, additional profits taxes corporate income tax usually payable or replaced with a special petroleum profit tax oil and gas production treated separately or together for tax purposes. 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. Production sharing agreements versus concession contracts julie ing. As liberians look forward to the necessary reforms in this regard, it must be our prayer that our potential hydrocarbon and petroleum resources lead to the blessings. Revenue sharing arrangements in production sharing agreements illustrate this point vividly. May 20, 2014 abstract governments choose among many contracts to delegate the exploration and the extraction of oil. Production sharing fiscal scheme for petroleum in which production at a surface delivery point is shared between a state entity and a private contractor psc or a production sharing contract or agreement prrt petroleum resource rent tax profit oil balance of production. Petroleum agreement means a production sharing contract entered into by the republic of.
An assessment of the production sharing contracts of. Through pscs, our partner bear exploration, development and production costs in return for an agreed share of production. Nocal, which shall be substantially in conformity with the model petroleum. An assessment of the production sharing contracts of liberia snohtimaria wureh s.348 90 68 1153 191 1160 1115 455 753 1429 814 1123 1123 1036 802 620 212 361 732 1128 571 490 1480 493 1022 11 267 712 650 928 1313 904 1127 316 120 1086 382