Negotiating upstream petroleum granting instrument terms with a state—what to do when the spider meets the fly

2020 ◽  
Vol 13 (4) ◽  
pp. 300-311
Author(s):  
Peter Roberts
Keyword(s):  
Petroleum Exploration ◽  
Production Sharing ◽  
Single Term ◽  
Exploration And Production ◽  
Host Government ◽  
Licence Contract

Abstract This article considers the key considerations to be borne in mind by an investor when negotiating the terms of an upstream petroleum granting instrument with a host government. In this article the term ‘granting instrument’ is used generically as a single term for ease of reference, intended to encompass all the different forms of petroleum concession, licence, contract or permit, but the article’s analysis is focused on the terms of a production sharing contract (PSC) simply because the PSC is the form of granting instrument which by far is the most widely used worldwide today for petroleum exploration and production. Despite this focus, many of the terms of the PSC which are considered in this article will also be relevant to other forms of petroleum granting instrument.

The effect of non-fiscal clauses in Host Government Instruments on the Fair Market Value of upstream opportunities

2019 ◽  
Vol 12 (6) ◽  
pp. 480-501
Author(s):  
Christopher Robertson Kinley Moore ◽  
Christopher Peter Moyes ◽  
Paul Dee Patterson
Keyword(s):  
Market Value ◽  
Petroleum Exploration ◽  
Due Diligence ◽  
Data Set ◽  
Production Sharing ◽  
Exploration And Production ◽  
History Of ◽  
Fair Market ◽  
Host Government ◽  
Fair Market Value

Abstract We identify nine categories of clauses in Host Government Instruments (HGIs, ie licences, concessions, production sharing contracts (PSCs), etc.) that potentially affect the Fair Market Value of petroleum exploration and production rights, in addition to the clauses quantifying the fiscal terms. The categories comprise state participation, performance bonds and penalties for failing to perform minimum work programmes, local content, decommissioning, natural gas terms, stabilization, assignment and change of control, renewals and extensions and governance issues. For each category, we review and summarize global practice in the top 50 oil-producing countries. We quantify our analysis using statistics from a data set of 55 representative HGIs, including contemporary alternative types for five countries. The age of each HGI used varies, guided by the history of oil production in each country. Texts are available for 53 HGIs and published summaries are available for the other two. The discussion provides a checklist for use in negotiating new HGIs or performing due diligence for transactions involving existing HGIs. Our choice of representative HGIs and our characterizations of some clauses are both in part subjective. Nevertheless, we suggest the statistics provide a useful guide to trends in global practice.

Conventional and unconventional hydrocarbon resource economics

2015 ◽  
Vol 55 (2) ◽  
pp. 410
Author(s):  
Bob George ◽  
Florent Rousset ◽  
Cecilia Jing Cui ◽  
Tianjiao Yan
Keyword(s):  
Regulatory System ◽  
Oil Field ◽  
Production Sharing ◽  
Provision Of Services ◽  
Exploration And Production ◽  
Resource Exploration ◽  
Contract Type ◽  
Host Government ◽  
Fiscal Regime ◽  
Unconventional Resource

The abundance of unconventional hydrocarbon resources in North America is not unique, though it is the only region that has seen significant progress in extracting and monetising these resources. Many countries have successful conventional exploration and production activities, and have developed suitable fiscal terms and governance models, but these models are challenged with the relevancy of these terms when applied to unconventional resource exploration, evaluation and development. This extended abstract reviews factors that are largely in the control of a host government (for example, the fiscal, licensing and regulatory system), and where challenges lie in cost disadvantages (the provision of services and infrastructure, for which different considerations and approaches need to be applied). It also compares the fundamental economic characteristics between similar-sized investments in an onshore unconventional play and in a conventional oil field in deepwater. Previously, the authors compared these investments in a US environment and the same characteristics will be used for examining typical terms in other environments around the world. By isolating impacts from leasing and fiscal terms, the economics will also be analysed before the overlay of fiscal terms, and then with a royalty/tax and a generic production sharing contract type of fiscal regime. The findings will help in understanding what can facilitate and accelerate the development of unconventional resources, and which enabling environments might be required to attract resources such as capital, technology and expertise.

scholarly journals World Petroleum Legislation: Frameworks That Foster Oil and Gas Development

2001 ◽  
Vol 39 (1) ◽  
pp. 70 ◽  
Author(s):  
William T. Onorato ◽  
J. Jay Park
Keyword(s):  
World Bank ◽  
Oil And Gas ◽  
Essential Element ◽  
Essential Elements ◽  
Petroleum Exploration ◽  
Oil And Gas Development ◽  
The World Bank ◽  
The World ◽  
Exploration And Production ◽  
Host Government

In this article the authors draw upon the experience of the World Bank in encouraging petroleum investment in its member countries to analyze the essential elements of international-standard legislative frameworks for petroleum exploration and production operations. The basic components of Petroleum Law, Regulations, and Model Contracts are examined with a view to explaining the principles and rationale for each essential element of successful legislative frameworks while recognizing that there is room for a myriad of variations and innovation depending on the hydrocarbon endowment, real or perceived, of each host government.

A Hybrid Petroleum Fiscal System for Investment in the Exploration and Production E&P of Hydrocarbon

2021 ◽  
Author(s):  
Oghenerume Ogolo ◽  
Petrus Nzerem ◽  
Ikechukwu Okafor ◽  
Raji Abubakar ◽  
Mohamed Mahmoud ◽  
...  
Keyword(s):  
Oil Field ◽  
Cost Recovery ◽  
Oil Price ◽  
Government Revenue ◽  
Profitability Analysis ◽  
Fiscal System ◽  
Exploration And Production ◽  
Host Government ◽  
The Cost ◽  
Spreadsheet Modelling

Abstract Globally, there are two types of petroleum fiscal system; the concessionary and the contractual petroleum fiscal system. The main differences between the two types of petroleum fiscal system is the ownership of the resources and some distinct fiscal terms. The contractual petroleum fiscal system specifies a cost recovery option and profit oil split unlike the concessionary petroleum fiscal system that allows the contractor to recoup his capital before payment of tax. This tends to increase the risk associated with the host government revenue as investment in the production of hydrocarbon is filled with uncertainties. There is a need to redesign the concessionary petroleum fiscal to enable it reduce the risk associated with the host government revenue by making the host government to earn revenue early from petroleum investment. This research therefore evaluated a hybrid petroleum fiscal system for investment in the exploration and production of hydrocarbon. The concessionary petroleum fiscal system was adjusted to include a cost recovery option. Petroleum economic model for investment in a typical onshore oil field was built using spreadsheet modelling technique with the fiscal terms in the hybrid petroleum fiscal system embedded in it. The cost recovery option and oil price in the model were varied between 0-100% and $20-$100 per barrel. The NCF, IRR and payout period of the investment were determined. It was observed that the lower the cost recovery option, the higher the host government revenue. From the profitability analysis of the investment in the hybrid petroleum fiscal system, it was observed that when the price of oil was $100/bbl, the NCF of the host government was $9146 and $8426.3 for 0% and 80% cost recovery option. The lower the cost recovery option, the higher the payout period and the lower the internal rate of return. Though lower cost recovery increased the host government revenue more but it may make the hybrid petroleum fiscal system unattractive for investment in periods of low oil price. Hence a higher cost recovery option was recommended for the use of this type of petroleum fiscal system.

Integration of Geophysical Technologies in the Petroleum Industry

2021 ◽  
Keyword(s):  
Co2 Storage ◽  
Petroleum Industry ◽  
Petroleum Exploration ◽  
Reflection Seismology ◽  
Seismic Reflection Data ◽  
Reflection Data ◽  
Advanced Students ◽  
Storage Reservoirs ◽  
Magnetic Resistivity ◽  
Exploration And Production

The most utilized technique for exploring the Earth's subsurface for petroleum is reflection seismology. However, a sole focus on reflection seismology often misses opportunities to integrate other geophysical techniques such as gravity, magnetic, resistivity, and other seismicity techniques, which have tended to be used in isolation and by specialist teams. There is now growing appreciation that these technologies used in combination with reflection seismology can produce more accurate images of the subsurface. This book describes how these different field techniques can be used individually and in combination with each other and with seismic reflection data. World leading experts present chapters covering different techniques and describe when, where, and how to apply them to improve petroleum exploration and production. It also explores the use of such techniques in monitoring CO2 storage reservoirs. Including case studies throughout, it will be an invaluable resource for petroleum industry professionals, advanced students, and researchers.

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