scholarly journals Comparative Analysis of Nigeria and Malaysia’s Production Sharing Contract (PSC)

2021 ◽  
Vol 6 (1) ◽  
pp. 11-17
Author(s):  
Victor D. Ola ◽  
Azubuike H. Amadi ◽  
Raphael Okeke ◽  
Paul O. Okafor
Keyword(s):  
Oil And Gas ◽  
Oil And Gas Industry ◽  
Gas Industry ◽  
Oil Companies ◽  
Production Sharing ◽  
Recovery Cost ◽  
Contractual Agreements ◽  
The Government ◽  
Reserve Size ◽  
Oil Company

The oil and gas industry is governed by policies with the aim of smoothening the business relationship between the Government, the International Oil Companies (IOC’s) and the Host communities. Different oil producing countries have their own laws governing petroleum activities and these laws vary from country to country based on the B-PEST factors which are Biological, Political, Environmental, Social and Technology. However, reserve size and oil type can also influence petroleum laws. Countries like Nigeria relies strongly on petroleum bills such as the PIB in which this research will be analyzing the Production Sharing Contract (PSC) which is a significant subset of the PIB. Comparison between the existing PSC of Malaysia and that of Nigeria was captured in this research and the analysis of the PSC was done based on the Government Take, National Oil Company (NOC) and the Contractor’s benefits. 26.67% and 56.58% recovery cost, 28.67% and 26.28% Government revenue, 23.14% and 7.64% NOC share, 21.52% and 9.50% Contractor share of revenue per barrel was arrived at for Malaysia and Nigeria respectively, showing that the Malaysian PSC model yields more income to the country when compared to that of Nigeria without necessarily short-changing the contractors or the IOCs. Finally, the reasons behind these deficits were highlighted and recommendations made to improve the PSC and benefits for all parties to the contractual agreements.

Legal Safeguards in Egypt's Petroleum Concession Agreements

2008 ◽  
Vol 22 (4) ◽  
pp. 387-396
Author(s):  
Minas Khatchadourian
Keyword(s):  
Host Country ◽  
Oil And Gas ◽  
Gas Production ◽  
Foreign Investors ◽  
Oil Companies ◽  
Production Sharing ◽  
Arbitration Clause ◽  
Legal Perspective ◽  
The Government ◽  
Oil Company

This article deals with the concession contracts for the exploration and the production of oil and gas in Egypt. Such tripartite contracts are concluded between the Government of Egypt (GOE) as the host country, a National Oil Company (NOC) as the concession holder and an international oil company (IOC) as the foreign contractor who receives a part of the oil or gas production on a production sharing agreement (PSA). From an Egyptian legal perspective, this contract is qualified as a State contract which is supposed to give the Government some exorbitant powers towards its counterparts. However, in order to attract foreign investors into this kind of agreement and encourage international oil companies to explore natural resources, several legal safeguards are incorporated in the concession agreement. Examples of this include placing the contract in the framework of a legislative act, granting the contract a supremacy on any contrary legislation, stabilization clause, adaptation of the contract through renegotiation, arbitration clause, etc.

scholarly journals The Possibility of Nationalization by the Kurdistan Regional Government of Iraq under the Light of Signed Petroleum Contracts and Establishment of Kurdistan National Oil Company (KNOC)

2020 ◽  
Vol 6 (1) ◽  
pp. 35
Author(s):  
Arez Mohammed Sediq Othman
Keyword(s):  
Oil And Gas ◽  
Oil Industry ◽  
Regional Government ◽  
Oil Companies ◽  
Production Sharing ◽  
Direct Support ◽  
Oil Sector ◽  
Oil Contracts ◽  
The Government ◽  
Oil Company

In the past 20 years, Kurdistan Regional Government (KRG) of Iraq has signed hundreds of Production Sharing Contracts with many international oil companies to expand investment and develop its oil sector. According to the applicable laws in the region, in particular Oil and Gas Law No.22 of 2007, government shall work to establish Kurdistan National Oil Company (KNOC) to take charge of petroleum operations. Meanwhile, according to the same law, the duration of petroleum production sharing contracts shall not exceed 20 years with the possibility of five years extension. Despite the fact that KRG is abided to many legal obligations to share the produced oil under production sharing contracts, there is always a question of whether KRG will be able to administer its oil industry and what will be the future of these oil contracts? This paper argues that KRG cannot nationalize (by appropriating the whole oil industry and assets of foreign oil companies) its petroleum sector even after the establishment of KNOC as there are many legal terms preventing it from nationalizing the oil industry besides the lack of technical ability to run the sector without the direct support from foreign oil companies. Moreover, the paper also discusses different possibilities after the end of oil contracts with foreign international companies; Does KRG continue with the current contractual form or it will shift to other forms of contract such as service contract to develop oil industry in the region? It suggests that the best practice for the government is to institutionalize its oil sector with receiving direct support from oil companies. The establishment of KNOC is considered to be an effective step towards institutionalization of oil sector in the Iraqi Kurdistan Region.

The distribution of petroleum resources in Malaysia: unpacking federalism

2020 ◽  
Author(s):  
Wan M Zulhafiz Wan Zahari ◽  
Farid Sufian bin Shuaib
Keyword(s):  
Oil And Gas ◽  
Petroleum Industry ◽  
Oil And Gas Industry ◽  
Economic Transformation ◽  
Gas Industry ◽  
Economic Significance ◽  
Petroleum Resources ◽  
The Government ◽  
Petroleum Development ◽  
Oil Company

Abstract This article examines the concept of federalism in the oil and gas industry in Malaysia. The petroleum industry is one of the 12 National Key Economic Areas (NKEAs) to enhance national growth under Malaysia’s Economic Transformation Programme (ETP). Due to its economic significance, the petroleum industry was given priority by the Government of Malaysia. The development of the oil and gas industry in Malaysia can be divided into two stages, ie the period before 1974 and after 1974. Prior to 1974, the ownership of hydrocarbon resources was placed under the jurisdiction of the respective 13 states forming part of Malaysia. In 1974, the Petroleum Development Act (PDA) was passed by the Parliament of Malaysia. Pursuant to the PDA, a national oil company has been established in the form of a public listed company which is called Petroliam Nasional Berhad (Petronas). The national oil company was granted the entire ownership and the exclusive rights, powers, liberties and privileges of exploring, winning and obtaining petroleum onshore and offshore Malaysia. Each state permanently conferred its ownership, rights, powers, liberties and privileges in the petroleum by executing the vesting instrument specified in the PDA. This article examines the rights of ownership of the Federation and the various states of Malaysia with regards to the hydrocarbon resources at the time of the formation of the Federation of Malaysia, and the gradual changes in the ownership of the hydrocarbon resources from the states to the absolute ownership of the Federal government in 1974. Furthermore, this article examines the legislation regulating petroleum resources and the role of the states and federation in the upstream oil and gas industry prior to 1974 and after the enactment of the PDA.

scholarly journals Addressing Residual Liability and Insolvency in Disused Oil and Gas Infrastructure Left in Place: The Cases of Brazil, Nigeria, and Trinidad and Tobago

2021 ◽  
Vol 11 (2) ◽  
pp. 326-361
Author(s):  
Eduardo G. Pereira ◽  
Tolulope O. Taiwo ◽  
Ngozi Chinwa Ole
Keyword(s):  
Trinidad And Tobago ◽  
Oil And Gas ◽  
Oil And Gas Industry ◽  
Gas Industry ◽  
Brazilian Government ◽  
Production Sharing ◽  
Lump Sum ◽  
Adverse Impacts ◽  
The Government ◽  
Secondary Liability

This article analyses the decommissioning framework for oil and gas infrastructures in Brazil, Nigeria, and Trinidad and Tobago. It examines whether the existing provisions in each country are able to guarantee that the government and, by extension taxpayers, do not bear the costs of decommissioning and, the consequences of insolvency on residual liabilities. An additional motivation for this examination is the ongoing Coronavirus Disease 2019 (COVID-19), a pandemic with significant adverse impacts on the oil and gas industry. A likely consequence of the economic devastation from this is the insolvency of any party with decommissioning obligations.The article argues that the provisions of the Brazil petroleum legislation on the reversion of abandoned installations to the government could imply that taxpayers have to bear the residual liabilities without any compensation from the concerned concessionaires or contractors. It also argues that the provisions of the Petroleum Law to the effect that ‘the reversion of facilities does not entail any expense whatsoever for the Brazilian government ’does not certainly translate to pecuniary compensation to the latter for assuming the future residual liabilities from abandoned installations. The Nigerian and the Trinidad &Tobago Decommissioning Framework also suffer the latter risk of the government bearing the residual liabilities for such disused installations.In Nigeria, the framework is silent on who bears the residual liabilities for disused installations. However, it is argued that the provisions of the Production Sharing Contracts on the transfer of ownership to the Nigerian government implies that they would have to bear eventual liabilities for such disused installations. Even in cases where the licensee or contractor may bear the burden of residual liabilities, the problem of future insolvency and cessation of such companies may entail that taxpayers bear the burden of residual liabilities. The article concludes with key recommendations on how to address the identified gaps using lessons from best practices such as United Kingdom, Norway and United States of America. One of such proposals is on the allocation of liability where there is a transfer of interest. Another is for joint and several or at least secondary liability of responsible parties even after decommissioning activities are over; a recommended provision to this effect is also provided. The third recommendation is on how time-constrained residual liability can be used alongside lump sum payments to limit the State's financial exposure for decommissioning costs.

scholarly journals Contractual Systems in the Oil and Gas Sector: Current Status and Development

Energies ◽  
2021 ◽  
Vol 14 (17) ◽  
pp. 5497
Author(s):  
Fatima Dirani ◽  
Tatiana Ponomarenko
Keyword(s):  
Oil And Gas ◽  
Oil And Gas Industry ◽  
Current Status ◽  
Gas Industry ◽  
Advantages And Disadvantages ◽  
Natural Resource Extraction ◽  
Production Sharing ◽  
Contractual Agreements ◽  
Key Aspects ◽  
Oil And Gas Sector

Production activities in the oil and gas industry are capital-intensive and associated with high technology, with these assets not always being available to oil-producing countries or national companies. Any form of interaction between the parties involved in natural resource extraction requires clear regulation regarding contractual relationships. This study attempts to analyze Indonesia’s production sharing contract system in order to assess its applicability to other conditions. The article covers the key aspects of contract theory, provides a classification of contractual systems in the oil and gas sector, and discusses the most common types of contractual agreements. It also considers the key principles of production sharing contracts (PSCs), analyzes the development of PSC practices in Indonesia over the past sixty years, and highlights PSC advantages and disadvantages.

What Does Rent Give to Federal Budget (on the Russia's Budget Dependence upon "Oil Dollars")

2004 ◽  
pp. 51-69 ◽  
Author(s):  
E. Sharipova ◽  
I. Tcherkashin
Keyword(s):  
Oil And Gas ◽  
Strong Dependence ◽  
Oil Prices ◽  
Federal Budget ◽  
Oil And Gas Industry ◽  
Gas Industry ◽  
Resource Rent ◽  
Tax Legislation ◽  
Russian Economy ◽  
The Government

Federal tax revenues from the main sectors of the Russian economy after the 1998 crisis are examined in the article. Authors present the structure of revenues from these sectors by main taxes for 1999-2003 and prospects for 2004. Emphasis is given to an increasing dependence of budget on revenues from oil and gas industries. The share of proceeds from these sectors has reached 1/3 of total federal revenues. To explain this fact world oil prices dynamics and changes in tax legislation in Russia are considered. Empirical results show strong dependence of budget revenues on oil prices. The analysis of changes in tax legislation in oil and gas industry shows that the government has managed to redistribute resource rent in favor of the state.

scholarly journals How Oil Contracts Affect Human Rights

2018 ◽  
Vol 3 (4) ◽  
pp. 30
Author(s):  
Maria João Mimoso ◽  
Clara da Conceição de Sousa Alves ◽  
Diogo Filipe Dias Gonçalves
Keyword(s):  
Human Rights ◽  
Oil And Gas ◽  
Social Issues ◽  
Oil And Gas Industry ◽  
Gas Industry ◽  
Oil Companies ◽  
The Social ◽  
Oil Contracts ◽  
The 19Th Century ◽  
The Impact

Since the beginning of the 19th century, we have assisted major proliferation of the oil and gas industry. This phenomenon of exponential growth is due to the fact that oil companies hold the world’s oil monopoly on the extraction, processing and commercialization. Therefore, as being one of the most influential sectors in the world, is crucial to strictly regulate how oil and gas contracts concerns the potential environmental and social impacts arising from the conduct of petroleum operations and how such behavior affects the human rights. As a matter of fact, the social issues field is an emerging area, and despite such importance, oil contracts do not often deal with them in great detail, corresponding to an actual emptiness of the human rights provisions. In terms of responsibly, oil companies, have an inalienable obligation to ensure that their actions do not violate human rights or contribute for their violation. This study aims to trace a detailed analysis of the impact of the oil and gas agreements in human rights. In order to fully comprehend the deep effects of this industry, we will examine, in detail, numerous of published oil and gas agreements, as well as, decode which are the real standards and practices accepted by this industry. We will use a deductive and speculative reasoning. We will try to demonstrate how incipient and short protection is given to human rights and what responsible conducts must urgently be developed.

scholarly journals MANAGEMENT AUTHORITY OF OIL AND GAS RESOURCES IN ACEH TERRITORY AFTER SIGNING THE GOVERNMENT REGULATION NUMBER 23 YEAR 2015

2018 ◽  
Vol 3 (Number 2) ◽  
pp. 59-69
Author(s):  
Azhari Yahya ◽  
Nurdin MH
Keyword(s):  
Government Regulation ◽  
Oil And Gas ◽  
Oil And Gas Industry ◽  
Gas Industry ◽  
Oil And Gas Fields ◽  
Oil And Gas Resources ◽  
Free Aceh Movement ◽  
The Government ◽  
Gas Fields ◽  
Energy Law

The oil and gas industry in Indonesia has been started since 1871 by Royal Dutch Shell. Meanwhile, the oil and gas industry in Aceh began in 1971 which was marked by the discovery of the Arun oil and gas fields. At that time, the management of oil and gas is done centrally by not involving the Government of Aceh as a regional producer. This led to armed conflict between the Government of Indonesia and the Free Aceh Movement and prolonged conflict (for 32 years) ended with the approval of the joint oil and gas management pattern found in the territory of Aceh as stipulated in the MoU Helsinki on August 15 2005, Law No. 11 of 2006 concerning the Government of Aceh and Government Regulation No. 23 of 2015 concerning Joint Management of Oil and Gas in Aceh. In order to finalize joint oil and gas management in Aceh, universities, especially the Faculty of Law, need to immediately prepare human resources who are competent in the oil and gas and energy law so that they are skilled at negotiating and drafting a Production Sharing Contracts (PSC) for oil and gas or Kontrak Bagi Hasil (KBH). For this purpose, law faculties need to immediately incorporate oil and gas and energy law courses into their curriculum.

Issues of Environmental Impairment Liability Insurance in the Russian Oil and Gas Industry

2019 ◽  
Vol 2019 (4) ◽  
pp. 160-175
Author(s):  
Anna Popova
Keyword(s):  
Environmental Pollution ◽  
Oil And Gas ◽  
Oil And Gas Industry ◽  
Oil Products ◽  
Nature Management ◽  
Environmental Damage ◽  
Gas Industry ◽  
Oil Companies ◽  
Management Measures ◽  
Expert Assessments

The author studies environmental insurance in nature management as a lever of management measures to prevent and eliminate environmental pollution by oil products during their transportation and oil fields development. The research aims to develop recommendations for environmental risks insurance in Russian oil and gas industry on the basis of economic and mathematical model that allows to estimate the scale of environmental pollution by oil products. Such methods as system and comparative analysis, expert assessments, forecasting, modeling used in this work helped the author to identify Russian environmental insurance features; to propose a method for solving the problem concerning the lack of statistical data on the frequency and scale of accidents and the environmental damage magnitude by mathematical modeling of the accident, which allows to estimate the radius and depth of the underlying surface pollution. These developments will help insurers to make more adequate insurance premiums and tariffs, as well as to improve the underwriting procedure for unique oil and gas projects. But in order for the obtained achievements to find their application, it is necessary to have legislation obliging oil companies to compensate for environmental damage, and due to the scale of such damage, oil companies will be obliged to insure the relevant risks.

scholarly journals Board Profile and its Influence on the Stock Value of Oil Companies and Gas

2016 ◽  
Vol 9 (8) ◽  
pp. 37
Author(s):  
Savio De Luna Pinto ◽  
Aline Alves de Andrade ◽  
Roselaine Cristina Borges ◽  
Celso Machado Jr.
Keyword(s):  
Oil And Gas ◽  
Market Value ◽  
Oil And Gas Industry ◽  
Research Information ◽  
Gas Industry ◽  
Oil Companies ◽  
Age Diversity ◽  
Stock Value ◽  
Favorable Conditions ◽  
The Relationship

<p>This article identifies the profile of the boards of the ten largest companies in the Oil and Gas industry on NASDAQ and the variation of their stocks. The research contributes to the study developed by Andrade (2009) which established the relationship between corporate governance and market value in Brazil. Additionally, Connell and Cramer (2010) studied the advice of Ireland companies, point out the importance of analyzing the board's composition and its influence on the organization's performance in the stock market in different segments. The method was a qualitative analysis of the board, and the correlation of the board with the variation and point that studies in a number of other countries generally fail to report any significant association between board composition and firm performance. The research information shows that the best performing companies have common characteristics: advice with fewer members; age diversity of members and specifically trained in master. These characteristics capable of being incorporated by the companies and that give power to favorable conditions for companies, for shareholders and for society in general.</p>

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