This jva in nigeria was associated with poor funding, due to the imbalance in the financial capacity of the different joint venture partners, especially the. Production sharing contracts production sharing contracts or agreements psc hereafter are ubiquitous in much of asia, africa and the middle east, with only a handful of countries in these regions adopting a royaltytax or concession rt regime or some hybrid. Production sharing contract in the nigerian oil and gas sector nigeria had in the past years engaged in joint venture agreement jva for the exploration of her petroleum resources. Strengthening market linkages for smallholder rural. Negotiation of an initial exploration period with the possibility to extend this twice.
This report analyses and makes public two production sharing agreements agreed by the ugandan government and international oil companies in february 2012. Renegotiation of nigerias production sharing contracts. The oil and gas industry in uganda, if compared with other oil producing countries in africa like nigeria and libya, is relatively new. Chapter 5 compares the ugandan model psa 2012 with the nigerian modern concession to ascertain whether psa offers maximum economic rent to uganda. Productionsharing agreements oxford institute for energy. The psas have been a matter of public concern with many people calling upon the government to make them public. Whereas, the petroleum exploration and production act 1980 the act. Production sharing agreements psas are among the most common types of. The government models cover two different scenarios one a field of 800. An empirical analysis 5 production sharing agreements 1966b98 5. How to scrutinise a production sharing agreement pubs. Independent power projects in subsaharan africa eberhard, gratwick, morella, and antmann independent power projects in subsaharan africa lessons from five key countries anton eberhard, katharine gratwick, elvira morella, and pedro antmann directions in. Fiscal regimes, petroleum contracts, and natural gas. Revenue sharing arrangements in production sharing agreements illustrate this point vividly.
Production sharing contract in the nigerian oil and gas. Readers should take legal advice before applying it to specific issues or transactions. Uganda currently has five production sharing agreements, covering much of the western border with congo and the northern border with sudan. Eria hisali school of economics makerere university. Under concession an oil and gas company typically pays royalties and corporate income tax. Production sharing agreements, africa, stateinvestor contracts, oil and. It also prohibits the employment of children under the age of 12 years probation the maximum period of probation in uganda is 6 months but which can. A credit suisse analysis of heritage oil predicts government take of between 55% and 67%. Other payments to the government may be applicable, such as bonuses, rentals, resource taxes, special petroleum or windfall profit taxes, export duties, state participation and others.
An application of the principalagent model appendix 4. Model production sharing contract under the petroleum act. Production sharing agreements psas or production sharing contracts pscs are a common type of contract signed between a government and a resource extraction company or group of companies concerning how much of the resource usually oil extracted from the country each will receive. This article looks at a new model of production sharing contract, which was developed as part of a recent transaction whereby canadian overseas petroleum bermuda limited coplb and exxonmobil. Model psc, and the 2011 resolution agreements, along with the associated production sharing agreement psa signed between shell and eni. Government revenues from opl 245 assessing the impact of. The development of a new regulatory framework for the petroleum sector was driven by the need to modernize a regime that was first established in 1986. The terms of the 2012 agreement are far more financially beneficial to uganda compared to the agreements made before 2008, a report by global witness, an oil. Julius kiiza school of humanities makerere university. Don hubert, phd resources for development consulting march 2016. In particular, we look at each countrys variation of. The goal of the uganda pin project is to reduce the. Uganda oil uganda production sharing agreements oil.
Psa psa the government of uganda achieved a better deal, at least in the financial sense, for its oil in the production sharing agreements that the government signed in 2012. Internal figures modelled by the government indicate that the state will receive 67. How to scrutinise a production sharing agreement a guide or the oi and gas sector ased on eerience rom the asian egion 2012. The principle of sanctity of contract in international. Implications of the proposed 2015 model production sharing. When it involves the period of gas sales agreement which is beyond the efective date of the contract, the extension may be proposed at a sooner date. Until november 2009, the content of the production sharing agreements. New production sharing agreement for tanzania ashurst. Under these arrangements, the nnpc is the holder of the concession while the ioc is the contractor. The questionnaire was pretested for validity and reliability with 10 management staff. Therefore, understanding the key characteristics of this model remains important in kazakhstan and elsewhere.
The oil production sharing agreements are here for you to browse in full. Together with partners in lower and middleincome countries, iied has been working to strengthen local and national capacity to examine contractual issues with a sustainable development lens. It provides that a person shall not be employed under a contract of service except in accordance with the provisions of the act. This portion of the seminar is designed to introduce ohio lawyers to some of the more common oil and gas contracts, and the issues that most frequently come to pass during negotiations of those contracts. Product is recovered for onward transportation and processing utilising midstream and downstream infrastructure through which crude oil, natural gas and other related natural resource byproducts such as condensates, ethane. Gaining access to procurement and contract information has been difficult, and depended on the goodwill and attitude of individual agencies. The government of uganda has signed production sharing agreements with oil companies prospecting and showing interest in production of oil in uganda. Royalty, therefore, becomes a part of total net revenue of the state from the 1 according to the federal law no. The government developed a model production sharing agreement. Licenseconcession agreements, joint ventures, and production sharing agreements jenik radon it is in the interest of natural resourcerich countries to use their resources to obtain funds for social and economic development. Internationalization of the petroleum industry as reflected.
A comparative analysis of production sharing contracts of. Key features of the current model production sharing contract include. Contract extension proposed to the minister through bpmigas within 10 to 2 years prior to the original contract expiry date. Uganda country fact sheet on food and agriculture policy trends september 2015 fapda food and agriculture policy decision analysis country situation and role of agriculture the republic of uganda, located in eastern africa, is a landlocked country occupying a total area of 241 550 km2, of which 18 percent is open inland waters and wetlands. Nigeria, indonesia, malaysia and equatorial guinea. The deloitte guide to oil and gas in east africa where potential lies 20 edition. In this agreement, unless the context otherwise requires. Oil and gas legislations are varies in every country, they depend on the purpose and the intention of regulating the countries strategic assets. However, in contrast to production sharing contracts, in a service contract the iocs. Legal framework of the nigerian petroleum industry. A mineral production sharing agreement mpsa is one that the government grants to a contractor for the right to mine within a specific area and includes a mechanism of sharing the resources.
From the fgns perspective, given that some of these pscs were negotiated and entered into over 20 years ago, there is a need to update them to reflect current realities and also to ensure that they produce a lot. The production sharing agreements signed in uganda do not represent the great deal publically claimed by the government. The 2003 and 2005 psc terms are broadly similar, with only two significant differences. In some cases, we used the access to information act to request this information, but. Sources of potential government revenue 16 1 royalty 16 2 production sharing 17 3 state equity 18. Contract area, it shall report such discovery to the government within thirty 30 days of the making of such discovery and shall supply a sample of such minerals. They determine what share of oil revenues the government of uganda will get and almost every aspect of its relationship with the oil companies. The contractor shall a be responsible to the government for the execution of the petroleum operations contemplated hereunder in accordance with the provisions of this. This report aims to provide an indepth analysis of ugandas production. The deloitte guide to oil and gas in east africa where. He has been a canadian diplomat and a university professor, and. All contracts are based on a model production sharing contract psc issued as a schedule to the regulations issued under section 6 of the act. Model psc under the petroleum act page 2 production sharing contract dated this agreement is a production sharing contract made under the petroleum act between the, acting on behalf of the democratic republic of timorleste the ministry.
However, the main objectives of each state party are. Apr 20, 2016 potential petroleum revenues for the government of kenya implications of the proposed 2015 model production sharing contract. Joint development authority model production sharing contract of 2004 extract clause 1 definitions clause 2 bonuses 2. Production sharing agreements free download as word doc. Production sharing agreement for petroleum exploration development and production in the republic of uganda by and between the government of the republic of uganda and tullow uganda limited in respect of exploration area 1 february, 2012. Influence of economic factors on performance of project. Contracts curse ugandas oil agreements place proit before people. The fundamental distinction between psc and rt regimes lies in the. In a service contract, similar to a production sharing agreement, the closest legal framework, the international oil company brings the technology and makes the upfront capital investment.
Contracts curse ugandas oil agreements place proit before. Production sharing contract will be brought into discussion. Jul, 2015 licensing of petroleum exploration blocks, is governed by the petroleum exploration and production act chapter 308 of the laws of kenya. Upstream production tends to be subject to more complex fiscal terms bonuses, royalty, production sharing, additional profits taxes corporate income tax usually payable or replaced with a special petroleum profit tax oil and gas production treated separately or together for tax purposes. Model production sharing contract datasets resourcedata. Petroleum licenses and production sharing agreements 10 5.
Sample psa cash flow with volumebased sliding scale. An agreed percentage of the contract area is to be surrendered at the end of each exploration period. The production sharing contract psc was widely introduced in 1993 to address some of the issues faced by the joint operating agreement joa and also to provide a suitable agreement structure for encouraging foreign investment in offshore acreage. This is reflected in the organic development of its regulatory and legal regime and to, by extension, the various. Production sharing contracts specials journal ogel. Sep, 2014 internationalization of the petroleum industry as reflected within ugandas host government contract published on sep, 2014 an understanding of ugandas oil and gas legal and regulatory framework. At the end, this dissertation will compare both regimes from a contractual perspective in order to answer whether it is really necessary to adopt a new regulatory framework based on a production sharing contract for the subsalt area in brazil. The study made use of a survey questionnaire administered through drop and pick later method. Production sharing systems 11 the model production sharing agreement 12 contract negotiations 12 the signed psas 12 may 2014 6. Contract management is the process of managing contract creation, execution, and analysis to maximize operational and financial performance at an. A comparative analysis of production sharing contracts of selected developing countries. The specific fiscal terms are set out in a production sharing contract or psc. An empirical analysis 5 productionsharing agreements 1966b98 5.
The evolution of industry in uganda marios obwona national planning authority. Uganda labour law highlights the employment act of 2006 sets the minimum standards of employment standards in uganda. Analyzing the changes introduced by ugandas 2016 model. They participate in the petroleum industry in joint ventures with nnpc, as operatorscontractors in the nigerian deep water under production sharing contracts with nnpc. Effective date means the first day of the month next following the month in which this agreement is signed by sonangol and contractor group. Kenya model production sharing agreement mpsa does not provide for royalties. This contract is a production sharing contract, in accordance with the provisions herein contained. Model production sharing contract this document is part of the source library for nrgis 2017 resource governance index, a comprehensive measure of the quality of natural resource governance in 81 oil, gas and mineralrich countries. The block 4 contract allows state participation up to 20%. Productionsharing agreements psas are among the most common types of. A comparison with concessionary system from the political, financial and functional point of view i. The deduction method provides that some costs incurred in production can be removed from the gross production in arriving at the net production on which royalties are computed.
The model production sharing agreement 12 contract negotiations 12 the signed psas 12 may 2014. The government of uganda achieved a better deal, at least in the financial sense, for its oil in the production sharing agreements that the government signed in 2012. The government of uganda through the development finance department dfd of the bank of uganda managed several credit programs, see table 1, that supported various investment projects in the different sectors of the economy, including agriculture, agroindustry, manufacturing and the. The productionsharing contract originated in the 1960s in indonesia, conceptually and culturally derived from the sharecropping model then familiar to indonesians and indeed much of the agricultural world where agricultural leases have traditionally often been based on simple productionsharing. Production in the republic of uganda by and between the government of the republic of uganda and tullow uganda limited in respect of exploration area 1 february, 2012. Production sharing fiscal scheme for petroleum in which production at a surface delivery point is shared between a state entity and a private contractor psc or a production sharing contract or agreement prrt petroleum resource rent tax profit oil balance of. The beneits of this option are that the gandan state receies a greater proportion of reenues, shares in the priate companys proitabiity whie ensuring a more een sharing of the potentia upsides the chance that the proect succeeds. The recovery and production including initial processing from fields. None of these are available online and despite repeated requests to the relevant government. Independent power projects in subsaharan africa eberhard, gratwick, morella, and antmann independent power projects in subsaharan africa lessons from five key countries anton eberhard, katharine gratwick, elvira morella, and pedro antmann directions in development energy and mining.
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