Naslov
Production Sharing Contracts in the Oil and Gas Industry

Autori
Brnabić, Ratko

Izvornik
Economic and Social Development, 16th International Scientific Conference on Economic and Social Development: The Legal Challenges of Modern World (1849-7535) 2 (2016), 16; 151-160

Vrsta, podvrsta i kategorija rada
Radovi u časopisima, članak, znanstveni

Ključne riječi
Production Sharing contract, Liabilities of the Parties, Production of Oil and Gas.

Sažetak
When dealing with the issues of gas and oil exploration and production, international investors and host countris can use different types of agreements: concession contracts, production sharing agreements, joint operating agreements or contracts services. Production Sharing contracts come in a variety of styles. There are two parties to the contract, a foreign oil company and a government representative which can be a head of state, a ministry or a national oil company The latter is the more common case. On the side of the foreign contractor we frequently find joint ventures or consortia rather than an individual firm but they all are considered to be one party to the contract so they must agree on the details of their cooperation because, in the end they as partnership assume all costs and risks associated with the exploration and production of oil and gas. In the event that a commercial discovery is made, the international oil company is entitled to a share of the production in order to recover all costs as well as to have a return on the investment. One of the main objectives of the Contract is to attract multinational companies in the sector of oil and gas that are interested and willing to risk capital and utilize technological expertise to develop the reserves in the Country. Namely, most of hydrocarbons reserves are located in developing countries without technical skills (seismic surveys, drilling wells, production techniques) nor financial means (low access to capital markets) to efficiently exploit natural resources. Hence, governments often delegate the exploration and production activities to international extractive companies. Under the Concession regime the international oil company is the owner of the petroleum extracted from the soil. For the Production sharing Contract, on the other hand, the country is the owner of the oil. In this way, the contributions to the state are no longer through taxes and royalties, but the extracted oil is passed on to the state directly. Part of the petroleum is then given to the international oil company as a compensation for its activities and the risks involved with the exploration. Although the oil belongs to the State, the companies take the risks. However, the State can also take risks by allowing part of its profit to be used to develop the area. In the paper special emphasis is given to the following questions: Parties and Instruments of Contracts, Ownership of Production, Ownership of Installation, Responsibilities of International oil companies and the Government.

Izvorni jezik
Engleski

Znanstvena područja
Pravo

POVEZANOST RADA