How Governments Manage Their Offshore Petroleum Resources
Chapter 8: Production sharing contracts
This chapter looks at PSCs to see what can be learned from them about resource management. It starts by identifying similarities between licences and PSCs (for example they both confer exclusive rights over an area). PSCs are different from licences in that the oil company is a contractor and obtains a share of the petroleum which it produces. Petroleum is shared by reference to a formula which allows the contractor to recover costs and profit oil. Some of these are based on rates of return or R-factor calculations. The chapter examines the effects of these formulae on performance. It gives examples of management and governance provisions in PSCs and also examines development approvals and other resource management provisions.
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