Production Sharing Contracts

Get to grips with the upstream economics and commercial aspects present in Production Sharing Contracts

This highly practical and interactive three-day programme will help you to learn how:

  • Identify strategic, political, legal and contractual issues of existing PSC
  • Prepare PSC contract negotiations for upcoming bidding rounds
  • Understand key risks associated with PSC in comparison to other fiscal systems
  • Review the performance of discounted cash flow analysis
  • Conduct commercial, competition and risk assessments

 

What is the programme about?

Since the first production sharing contracts (PSC) in Indonesia (1960s) and Nigeria (1980s), the number of countries which have adopted PSC has grown significantly. Nowadays there is a variety of PSC forms in existence, including hybrid forms with concession and corporate tax systems. Although they generally follow the base principles, it is essential to understand and analyse the level of the risk being shared, where the responsibility starts and ends as well as the impact of different fiscal systems.

This highly-focused programme offers delegates an in depth into the workings and analysis of a variety of PSC forms and includes real life examples, exercises and spreadsheet modeling aspects. As a result, delegates will be enabled to successfully balance legal considerations with commercial opportunities. 

  • Strategy and Business Development Managers

  • Legal Advisors and Legal Consultants

  • Negotiations and Contracts Managers

  • Commercial Managers

  • Financial Managers

  • Financial Accountants

  • Petroleum Economists

  • Cost Analysts

  • Senior Portfolio and Planning Advisors

  • Legal Advisors and Legal Consultants

  • Negotiations and Contracts Managers

  • Policy Analysts

  • New Venture Managers

  • Market Analysts

Module 1: Discounted Cash Flow Method

  • Cash flow properties
  • Discounting and Value
  • Inflation
  • Taxation/Production Sharing
  • Asset valuation and Performance Indicators
  • Familiarisation Economic Spreadsheet Model & Exercises


Module 2: Production Sharing Contracts


Overview Petroleum Agreements / Fiscal Systems

  • General overview as context for the PSC
  • Government objectives and strategies
  • State participation


Government Fiscal Instruments

  • General and PSC fiscal instruments
  • Country drivers for fiscal and PSC
  • Uncertainties and risk distribution


Analysing PSC

  • PSC account structure and production allocation
  • PSC contractor and government cash flow
  • Cash flow comparison Concession Agreement and PSC
  • Risk analysis
  • Workings of PSC (parameters)
  • Natural gas


Examples PSC Framework and Modeling

  • Simple PSC (Egyptian)
  • PSC with Tax (Nigerian)
  • Other
  • PSC and Carry arrangements
  • PSC and Complex Tax and Sharing Algorithms


Portfolio aspects Partnerships and joint operating agreements (JOA)

  • PSC and Principles of Unitization
  • Ring-fenced and PSC consolidated fields and licenses
  • Portfolio production sharing and taxation issues


PSC Agreement Documentation

  • Typical Documentation Content
  • Obligations and Risk
  • Administrative provisions
  • Relinquishment, Termination and Contract duration
  • Hydrocarbon accounting and allocation
  • Approval cost recovery – data management issues
  • Decommissioning


Module 3: Team Assignment
 

Management Proposal and Presentation
This unique scenario is based on real life examples has been developed to allow participants to apply all aspects of the learning and develop their understanding of the beginning to end proposal process under the practical guidance of the expert trainer. The participants will be split into groups at the beginning of the course and the group work will be carried out in stages across the programme culminating in a proposal and presentation as the last session.


This will include:

  • Bidding on a Production Sharing Agreement
  • Compiling the Management proposal from
  • Proposition
  • Funding required
  • PSC description
  • Commercial and Competition through to risk assessment

 

Course Categories

Course Testimonials

“I suggest this course to everybody from the petroleum industry.”
 

Dritan Spahiu, Director of Policy and Development Directorate of Hydrocarbons Ministry of Energy and Industry

Delivered by

Evert Blomsma is an independent consultant who specialises in the economic analysis of oil and ga

Dates & Locations



This course is only available as a custom course tailored for your business, contact us to discuss your requirements.