Developing & Negotiating Production Sharing Contracts

At the end of this course you will: • Understand the philosophy, structure and benefits of different types of International contracts for sharing petroleum production • Appreciate the different roles and expectations of national oil companies and contracting oil companies • Improve your understanding of the critical contract issues, including non-financial aspects and their impact on economics and profitability • Identify and manage the risks and opportunities in the PSC terms • Apply common petroleum industry practice for negotiations at key stages in PSC's Case studies are used extensively throughout this programme

• managers and line specialists at all levels who are involved in negotiating PSCs and managing their implementation
• contracts managers and specialists
• personnel responsible for managing contracts to ensure their company achieves maximum benefit from the contract terms
• anyone requiring a better understanding of PSCs
  

What are PSCs and how do they work?
• PSCs compared and contrasted with other contracts for sharing production
• what are the key differences between concessions, service contracts and joint venture contracts?
• what are the rights and obligations of the parties at each stage?

• Understand what PSCs are designed to do and how they are evolving

• How to manage the obligations in the PSC with procurement contracts

The 5 Key Steps in the Negotiating Process

Negotiating Issues at the Licence Round Stage

How do PSCs deal with the Exploration Phase?
• managing timescales, minimum work programmes, appraisal and relinquishment
• how to set criteria, evaluate and agree when a discovery is "commercial"

Negotiating Issues at the Development Stage

Negotiating Financing and managing risk during development programmes

• Where to find sources of funding from the public and private sector

• Understanding the conditions and benefits

What are the PSC objectives in the Development & Production Phase?
• Understanding the differences between host countries and contracting companies and how to bridge the gaps
• check lists of the key elements for negotiation
• bonuses, royalties, taxes and pricing issues
• how to set up and manage cost recovery

How do we deal with "Non Financial Issues"?
• how to meet national policies and contract commitments for employment, training, local purchasing, technology transfer, and health, safety and environmental compliance

Who gets the production?
• how to work out the production splits
• untangling the R factor

How to use economics in the negotiation of PSCs?
• tools for assessing the value of success and the cost of failure
• how do we set the right price?
• special issues for marginal fields

Where is the balance of risk in the contract provisions?
• how to use incentive structures to even out the upsides and downsides of the contract terms for each party
• the challenge of abandonment obligations

In what ways are gas contracts different?
• special PSC considerations for natural gas and LNG production, transportation, processing and sales agreements

Bringing the PSC to a mutually satisfactory close out

Checklist of key negotiating steps for a PSC

Case Studies are used extensively throughout this program to reinforce learning

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