Technical Service Agreement Oil Gas

A government can make a concession to a gold seeker. The concession contract provides for a number of things. For example, the exploration conditions and the rules of the production agreement in case of success. A long time ago, a concession meant that the prospector became the owner of the resources within the concession area (UK North Sea) and for a partial period of up to 75 years. Over the years, concessions have been scarce, which has given way to production-sharing agreements, etc. The government wants to earn revenue from the beginning of exploration. Payments to the government sometimes include a bonus payment upon conclusion of the contract. This can be a standard bonus, but there are also auction rounds in which the highest bidder gets the deal. Thus, in 1969, companies spent a total of about $900 million on signing concessions on the Alaska North Slope (Weissler, 2019).

There may also be a discovery bonus. A more regular, but smaller, income comes from concession rents, a royalty per hectare or per square kilometer. Since some companies may obtain a concession, but do not intend to explore the concession, but to resell the concession, a government may impose spending commitments in the form of a minimum of geophysical expenditure and a minimum number of exploration drillings. In addition, a company cannot stick to the initial concession area indefinitely, since some of them must be compulsorily abandoned. In a success case, a production license is obtained for the discovery. Pay other rents and sometimes a big bonus when you reach a certain level of production. It is also possible that the host government may be able to participate in the undertaking. It could, in rare cases, retroactively take its share of exploration costs. Production agreement/contract A PPE is an agreement between the parties to a borehole and a host country on the percentage of production that each party receives after the participating parties have recovered a certain amount of costs and expenses. It is particularly common in the Middle East and Asia.

Although previous systems could be referred to as PSA, PSA became popular after its introduction in Indonesia in 1960. A PSC/PSA is negotiated either between a multinational and the host country or by offering. The host country remains the owner of the resource. Some of the oil produced is called “cost oil” and can be sold by the oil company to cover its costs. The rest is “profit oil”, the proceeds of which are shared between the government and companies (it could well be between 80 and 20%!). As a rule, there are expenditure obligations and fees. One of the best explanations I`ve found: Production Sharing Agreements: An Economic Analysis by Kirsten Bindemann, 1999. Joint Venture A joint venture between a foreign oil company and a national oil company of the host country. . . .

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