Contract Structure of Production Sharing Agreement by International Oil Company in Exploration of Petroleum Resources in Developing Countries

Abstract

Presently, there is little focus on the contractual agreement, particularly on the production sharing agreement by the International Oil Companies in the exploration of petroleum resources of developing countries. The primary objective of this paper is to critically explore the contract structure of production-sharing agreements by International Oil Companies in the exploration and development of petroleum resources in developing countries. Content analysis was used as the methodology of the study after examining several literatures. The findings indicate that the contract structure of the production sharing agreement (PSA) between National Oil Companies (NOC) and International Oil Companies (IOC) plays a significant role in the cost and risk of exploration and development of oil. In addition, it is noted that the joint committee of the NOC and IOC plays a paramount role in monitoring the operations of PSA between the NOC and IOC. Hence, from the gross oil production, the NOC gets its share as profit while IOC gets its share income tax. As an instrument of contract structure in the oil and gas sector, PSA needs further entrenchment between IOC and NOC to avoid likely issues that can emanate between the two parties in the face of current developments.

Bibliometric Analysis of Intelligent Systems for Early Anomaly Detection in Oil and Gas Contracts: Exploring Recent Progress and Challenges

“…It is important to note the importance of oil-rich countries such as Oman, Iran, Saudi Arabia, Egypt, and Pakistan in the bibliometric analysis. Works completed by Toutounchian et al [4], Hassan et al, Salem et al [8], Assad et al [40], and Acikalin [36] demonstrate those countries' importance to the research field.…”

“…Common contract types include production sharing agreements, which facilitate collaboration by dividing costs and benefits between oil companies and governments. Service agreements reimburse companies for their technical expertise and operational management, while concessions grant exclusive exploration and production rights in exchange for taking on associated costs and risks [1,5,8]. These contractual forms are tailored to comply with each locality's regulations and market conditions.…”

“…Some works, as reported by Hassan et al [8], discussed the production sharing agreement (PSA) contract requirements for the exploitation and exploration of oil. Within this contractual scheme, the government retains majority ownership of the hydrocarbons and collaborates with multinational oil entities that contribute financial resources and technical expertise to the exploration and exploitation process.…”

“…Auditing state contracts in the oil industry is an essential practice that ensures transparency, accountability, and the allocation of resources [2,7]. The unique high capital investment, significant revenues, geopolitical implications, and the public trust vested in the oil sector underscores the necessity of meticulous oversight [8]. For these reasons, anomaly detection has been essential to project management and initial operation [6].…”

Legal evolution in the financial realm: Propelling auditor accountability in England

“…As well as case law in the United States, there is a well-defined legal landscape on negligence and liability, as discussed by Hassan et al (2023) in the article discussing contract differences between international oil company exploration. In the US, two of the most fundamental pieces of legislation: the Securities Act (1933) and the Securities Exchange Act (1934) act to establish a comprehensive legal basis for auditors to be held accountable for the professional skills that they offer.…”