A-Z of Production Sharing Agreements

Course Description

This course has been specially written for high end employees, high level managers and board members of companies involved in E&P and who are operating in foreign states and who will have some exposure to State/Investor negotiations in respect of Cost Oil and Profit Oil and Production Sharing Agreements (PSA’s) or Production Sharing Contracts (PSC’s).

PSA’s / PSC’s provoke controversy. State sovereignty is at the heart of this. Add to that the fact that hydrocarbons are finite and the State will want as much money for its concession as possible. Investors want predictability of tax and regulation. National oil companies have a part to play and various methods of taxing the oil are in use in the modern world.

For many people in oil-producing countries, the question of who should benefit from oil revenues is one of principle. In some countries in the Middle East, oil production sharing agreements are ruled out by the constitutions or by national law, and foreign companies are only able to participate in technical service agreements, for fixed fees. Other countries have signed them historically but have now stopped them. Other countries are actively trying to withdraw from them through expropriation and nationalization.

But since the objectives of investor and government/state do not necessarily coincide and indeed may diverge substantially it is all the more important that they identify the likely sources of future conflicts and write a contract that is as comprehensive as possible. This divergence of objectives is frequently manifested in a lack of trust between the contractual partners. The relationship worsens if the government changes existing legislation and applies the new rules to contracts agreed under the old regime.

This course looks at how these tensions can be reconciled through the contractual device of a production sharing agreement.

Who will benefit

• Anybody seeking a clearer understanding of international contracts’ terminology and contract terms and conditions
• Anybody wishing involved in contract formation
• Anybody looking to understand the legal rationale behind their contracts in order to make better business decisions
• Anybody who wishes to build on the knowledge base acquired in the prior course

Why you should attend

You may be involved in your company’s negotiations in respect of concessions or licences or you may be employed by national oil companies which have the State responsibility to negotiate these or you may simply be interested to learn of this important aspect in oil and gas law.

Key topics

• The concept of State sovereignty and the concepts of licences and concessions and royalties
• Bonuses and incentive schemes
• Buy back schemes
• Fiscal tax regimes
• Risks involved in E&P
• Sharing the risk through PSA’s and PSC’s
• Bilateral negotiation and competitive bidding
• Facing the one sided State “negotiation”
• The use of National Oil Companies (NOC’s)
• Joint Ventures (JV’s), Consortia, Alliances, Partnership Agreements and Service Contracts
• Risk and Reward in Contract Types
• Stabilization Clauses
• Equilibrium Clauses
• Hardship Clauses
• Economic Equilibrium Clauses
• When things go wrong – remedies in Arbitration
• Principles of Arbitration
• Energy Charter Treaty
• ICSID Arbitration – taking on the state

Course details

• Blended learning using internet searches, videos, workshops, group sessions, and “edutainment”!
• Accelerated learning techniques to improve understanding and long-term retention
• PSA’s examined in depth and considered from a non-legal perspective, not a lawyer’s.
• Real life PSA’s examined

Course Duration: 2 Days