Course Overview
A Production Sharing Contract (PSC) is, in simplified terms, an agreement between the state and a contractor, where the contractor agrees to explore for and produce petroleum reserves within a defined contract area in return for an agreed economic share of the petroleum produced. PSCs are used in key oil and gas producing countries, each of these have different approaches and levels of complexity. Moreover, new PSCs have been recently adopted and developed in some key jurisdictions, such as Brazil and Mexico. These complex agreements include a number of clauses that have particular legal interpretation and accompanying fiscal formulas. Therefore, it is crucial to have the correct understanding of the terms in order to calculate the formulas correctly and ensure a smooth agreement implementation.
You will learn:
- Evolution of the PSCs, Service Agreements and concessionary systems
- Negotiation techniques and the role of counsel
- Comparisons of model PSCs in various countries
- Explanation and analysis of key provisions to make the PSC work
- The PSCs arrangements within the host government contracts’ framework
- Progressive and regressive elements and rates of return
- Review the relationship dynamics between governments and IOCs
- Commonly occurring causes of disputes and to gain knowledge on International Dispute Resolution Framework and Institutions: how to negotiate arbitration clauses
- Problems and pitfalls in contract negotiations
- A practical guide to balancing the State vs. investor risks
- In an optional one day course, Introduction to key English Contract Law Principles.
Market and expected outcomes
The four day training course is specifically designed for professionals involved nationally and internationally in the oil and gas industry. It offers a unique opportunity to rapidly increase your understanding of the legal issues involved in production sharing contracts and to improve your negotiation techniques and skills in drafting a variety of related contracts.
Therefore, the audience for this course will be:
- Commercial and business development managers within national and international oil and gas companies looking to improve their PSCs negotiation skills and overall commercial performance.
- Legal advisors involved in negotiating or renegotiating Production Sharing Contracts.
- Government representatives, policy makers, and regulators looking to increase their Production Sharing Contracts knowledge.
- Insurance and risk managers looking to reduce the legal and contracts risks for their companies
- Executives, professionals, and academics looking to increase or specialise in the area of Production Sharing Contracts.
Day 1 - (Module 1 - Optional)
This day should be attended by any delegates who have no recent formal education in contract law, and is a necessary prerequisite to key upstream agreements including Production Sharing Contracts drafting and negotiation. This day will act as a refresher session to delegates with formal contract law education but is not necessary.
The Legal Framework And Contract Law I
- The UK Legal System including sources of law
- Mandatory elements of a legally enforceable contract
- English contract Law: contract formation
- Terms and conditions
- English contract Law: contract terms
Workshop 1- Contract Terms And Content
Delegates will be presented with some problem solving exercises in which they will consider some issues surrounding the terms in some mock contractual situations.
Contract Law II
- English contract Law: interpretation of contract terms
- English contract Law: assessing available remedies for breach of contract
- Rescission
- Compensatory damages
- Consequential and incidental damages
- Liquidated damages
- Specific performance
- Injunctive Relief
Workshop 2- Interpretation Of Contract Terms
Delegates will consider some exercises in which the principles of interpretation of contracts will be used to find practical solutions to ambiguous contract terms, and will consider better ways in which the contract could have been framed.
Day 2 - (Module 2)
This part offers an overview to the typical oil and gas upstream arrangements. Thereafter, it concentrates on PSCs key provisions negotiating, reviewing, and how to avoid common contractual pitfalls.
Oil And Gas Contracts Fundamentals And Legal Principles
Agreement With Resource Holders: Granting Instruments
- Co Leases
- Concessions or Licensing model
- Service agreements
- Production Sharing Contracts (PSCs)
Workshop 3 - Case Study (Brazil): Production Sharing Or Concessions?
Delegates will compare and contrast various granting instruments from around the world with a particular emphasis on the differences between PSCs and the concessionary systems.
An Introduction To Production Sharing Contracts
- The history and evolution of PSCs
- Legal status of PSCs
- Countries using PSCs
- Relationship between contractor and government
- Advantages for the host state
Key Characteristics Of Production Sharing Contract
- The Subject of a PSC
- The State as a Party to a PSC
- The Exploration Activity of an Investor is at its Own Expense and Risk
- Ownership of Production Produced under a PSC and the Contractor Nature of an Investor under a PSC
- The Sharing of Product: Substance and Procedure
- PSC Sample, content and format
- Drafting issues
Workshop 4 - PSCs Drafting
Delegates will discuss drafting issues arising out of PSC’s and in doing so will consider some practical drafting examples
Day 3 - (Module 2)
Determining The Structure Style Of A PSC
- Comparisons of Model PSCs
- Azerbaijan
- Brazil
- Bangladesh
- China
- Cyprus
- India
- Kurdistan
- Russia
- Tanzania
- Timor-Leste
Workshop 5 - Model PSCs
Delegates will work through some model PSCs provisions and will consider the situations in which some of these key clauses could be used.
Review Of Key Provisions And Negotiation Options (I)
- Regulatory Provisions: rules and procedures regulating the right of the contractor to conduct petroleum operations
- Description or identification of the contract area
- Area relinquishment scheme
- Duration
- Possible sub-divisions of this period (exploration, development and production)
- Obligatory exploration programme
- Exploration expenditure commitments
- Financial Provisions and Disposition of Production:
- Contractor's production disposal rights
- Finance matters
- Banking
- Foreign currency exchange and transfer of funds abroad
- Insurance matters
- Cost Recovery Production Sharing and Taxes on Income and Profits: Rules and procedures concerning production sharing (involving contractor's compensation and reward) and contractor's income taxes
- Government's and contractor's takes are determined: division of oil and gas between host state, state party and contractor
- Phases and bonus payments
- Production sharing
- Profit shares
- Implementation of procedures for recovery of costs out of cost oil
- Cost recovery
- Liability for income taxes and who is responsible for payment
- Taxation of contractor’s profit
- Possibly provisions regarding economic stabilisation of the contract
- Stabilisation
- Possibly rules on opportunities and options for state party to contribute to investments
- State participation
Workshop 6 - Fiscal Instrument
Delegates will take part in a role playing exercise to consider X country whose oil and gas industry is undeveloped but, which shares borders with several other countries who are major hydrocarbon producers and wishes to establish a fiscal system to attract investment in the oil and gas sector.
Day 4 - (Module 2)
Review Of Key Provisions And Negotiation Options (II)
- Organisational and Cooperative Aspects: Rules and procedures concerning or involving the co-operation between state party and contractor
- Supervision, operatorship and cooperation between contractor and state party
- Operations under a PSC
- Control over and decision taking with regard to investments, operational matters and work programmes and corresponding budgets (insofar as they have not already been made obligatory)
- Training, infrastructure, and local content
- Declarations of commercial discovery
- Preparation of plans to develop such discoveries (development plans)
- Legal and Non-operational Matters
- Contractor’s obligation to provide parent company guarantees or bank guarantees with respect to the completion of obligatory exploration programme and/or exploration expenditure commitments or even contractor's performance generally
- Liability vis-a-vis third parties for damages caused by the execution of the authorised petroleum operations
- Contractor's obligation to keep the government and state party harmless against third party claims
- Indemnity clauses
- Effective use of force majeure clauses
Workshop 7 - Effective Use Of Indemnity Clauses
Delegates will consider an exercise involving how to limit risk through effective use of indemnity clauses in negotiation of a PSC.
- State party's acquisition of ownership of land and moveable assets
- Internal or external assignment of the contractor's interest in the contract
- Amendment and termination of the contract
- Government ratification or approval
- Applicable law
- Dispute resolution
- Preventing costly litigation through effective use of ADR option
- Types of dispute resolution vehicles
- Assessing litigation vs. arbitration options
- Mediation considerations
- Considerations for selecting effective mediators and Arbitrators
- Selecting arbitration and mediation rules of procedure
- Drafting effective dispute resolution clause
- Practical Exercise: Mock arbitration exercise
Workshop 8 - The Dispute Resolution Clause
Delegates will consider some examples of dispute resolution clauses and will critically examine these with a view to considering some of the essential ingredients of such a clause, as ideally framed.
The Joint Development Authority Model PSC
- Nigeria/Sao Tome & Principe
PSCs: Are they “joint ventures”?
- State participation rights under concessions or PSCs
- Special case: State participation as a commercial partner under the PSC
- Motivations of the State
- Conflicts between the State and other investors
- Regulatory/enforcement role of the State
- Special powers of the State
- Different types of state oil companies
- Evolving structure of petroleum administration
- Key provisions of governing agreements for joint ventures
PSCs and Joint Operating Agreements (JOAs)
From production sharing contracts to buyback contracts
Conclusion: Significance of the PSC for the National Economy and the Protection of the Interests of Investors
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Moe Alramahi
Moe Alramahi is an academic at a leading University in England, UK. He has been involved in advising Governments and private sectors alike on issues of relevance to upstream oil and gas agreements, both in negotiating key terms and drafting techniques.
Mr Alramahi has an international profile excellence and extensive training experience in delivering courses tailored to national and international portfolio of delegates, covering subjects such as, Oil and Gas Contract Negotiations and Management, International Oil and Gas Contracts, Dispute Resolution in Oil and Gas Contracts, International Commercial Arbitration, Production Sharing Contracts (PSCs), Contract Risk Management, Corporate Social Responsibility (CSR), Mergers and Acquisitions (M&A), Construction Contracts, and a practical introduction to Oil and Gas Law.
Mr. Alramahi is a Chief Editor of Journal of International Trade Law and Policy (JITLP). He is regularly invited to chair panels and key oil and gas conferences nationally and internationally. He serves as Domain Name Panelist at the reputable Asian Domain Name Dispute Resolution Centre (ADNDRC) and he has been member at various relevant law societies and organisations.
Mr Alramahi developed a popular Masters course in Oil and Gas Law and he sought successfully professional accreditation from the Energy Institute in London. Furthermore, he has published widely in the field. Recent publications includes; Alramahi, M (2011) “Dispute Resolution in Oil and Gas Contracts", International Energy Law Review, Issue 3/2011, 78-85; Alramahi, M (2010)"New gTLDs– Pandora's Box is open", International Review of Law, Computers & Technology, his forthcoming textbook “UK Oil and Gas Law: A Practical Guide” will be published in second quarter of 2012.
Courses run by this instructor
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26-28 Nov 2012 (London, UK)
This Euromoney Energy Training course examines the roles of benchmarking and performance monitoring through key performance indicators and the analysis of business models.
22-24 Oct 2012 (London, UK)
This 3 day Upstream Oil and Gas Acquisition and Divestment course will explain how upstream oil and gas assets are traded from both buyer and seller perspectives.
The course includes references to failed and successful deals and provides valuable insight into how to conclude successful transactions.
The principles of Licensing Rounds, Farm In and Farm Out processes are explored as well as key industry processes underpinning these transactions. It includes assessment of case studies, and an element of group work based on an “acquisition and divestment opportunity” where buyers and sellers meet to consider an opportunity and to “close a deal”.
17-19 Jul 2012 (London, UK)
Course topics include: Allocation of Risk under EPC; Contractor Selection; Impact on Project Structure; Implications for Project Financing; Determination of Damages; Special Circumstances for Refineries; Power
Generation; Gas Processing; Governing Law
12-15 Nov 2012 (Singapore, Singapore)
The Energy Risk Management: Mastering Volatile and Complex Markets course is a comprehensive and systematic introduction to risk management for complex energy markets. The course will detail why and how risks in energy – particularly gas and electricity - are more acute than in other traded market sectors, and how classic risk management techniques must be adapted and extended to meet these demanding conditions.
1-5 Oct 2012 (Singapore, Singapore)
This 5-day course is a comprehensive review of the key features of upstream management ranging from exploration and development through to production and transportation. The course will benefit attendees who wish to broaden and deepen their upstream management skills
16-19 Jul 2012 (London, UK)
People coming to energy risk management for the first time are taken aback by the extreme market conditions that are commonplace in the complex markets of oil, coal, and above all, gas and electricity. Levels of volatility and basis risk are unprecedented: and there are additional risks that are unique to energy. This course shows delegates how to deploy traditional risk management tools in the challenging context of volatile energy markets, and to extend these techniques to master the unique risk characteristics of gas and electricity.
19-21 Sep 2012 (London, UK)
This 3 day course concentrates on a review and analysis of energy trends over the next 20 years. While predicting future energy trends can be fraught with uncertainties, attention is given to reviewing and analysing a variety of key market drivers, applying sensitivities and discussing probable outcomes.
21-23 Nov 2012 (Lagos, Nigeria)
Attend this practical and interactive three-day training course and enhance your knowledge in the following key areas: The fundamental economic principles underpinning production sharing contracts (PSC’s); The history and evolution of production sharing contracts (PSC’s); The PSC structure, content and flowchart; Cost recovery, profile share, bonuses, sliding scales; Royalty and Taxation; Ringfencing; Key economic issues in PSC negotiations and bidding, featuring: Nigeria PSC economic modelling workshop, The economic impact of the Petroleum Industry Bill (PIB) and Global case studies
11-14 Jun 2012 (London, UK)
For operator drilling contractor and service company personnel that desire a specialised familiarisation, understanding and comprehension of Deepwater Drilling Operations, equipment, processes, systems and activities.
25-29 Jun 2012 (London, UK)
This 5-day course is a comprehensive review of the key features of upstream management ranging from exploration and development through to production and transportation. The course will benefit attendees who wish to broaden and deepen their upstream management skills.
16-19 Jul 2012 (London, UK)
4 days of course modules that focus on the review and examination of the key elements of the supply chain from upstream activities of exploration, development and production through transportation to downstream sector that involves trading, refining, petrochemicals and final distribution to the consuming markets.
5-8 Nov 2012 (Hong Kong, Hong Kong)
4 days of course modules that focus on the review and examination of the key elements of the supply chain from upstream activities of exploration, development and production through transportation to downstream sector that involves trading, refining, petrochemicals and final distribution to the consuming markets.
20-22 Aug 2012 (Hong Kong, Hong Kong)
This course is designed for professionals who need to develop an understanding of the unique aspects of the energy industry, including the oil and gas commercialisation and business development or facilities evaluation and commercialisation.
The course will focus on the skills required in evaluation (both buyside and sell-side), financing, acquisition, and exploitation planning for an oil and gas entity, a midstream facility or electrical generation plant.
8-10 Oct 2012 (Singapore, Singapore)
This Euromoney Energy Training course examines the roles of benchmarking and performance monitoring through key performance indicators and the analysis of business models.
25-29 Jun 2012 (London, UK)
Featuring 3–individually bookable modules:
- Upstream development & production
- Mid-stream pipelines & LNG projects
- Downstream oil refineries & petrochemical plants
- Including: 16 key industry case studies to improve your understanding
24-27 Sep 2012 (London, UK)
22-31 Oct 2012 (Hong Kong, Hong Kong)
20-23 Nov 2012 (Singapore, Singapore)
For operator drilling contractor and service company personnel that desire a specialised familiarisation, understanding and comprehension of Deepwater Drilling Operations, equipment, processes, systems and activities.
17-20 Sep 2012 (London, UK)
This four day training course is specifically designed for
professionals involved internationally in the oil and gas
industry, it offers a unique opportunity to rapidly
increase your understanding of the legal issues involved
in various international scenarios and to improve your
techniques and skills in drafting a variety of
international contracts.
12-14 Nov 2012 (Hong Kong, Hong Kong)
This 3 day course concentrates on a review and analysis of energy trends over the next 20 years. While predicting future energy trends can be fraught with uncertainties, attention is given to reviewing and analysing a variety of key market drivers, applying sensitivities and discussing probable outcomes.
12-15 Nov 2012 (Singapore, Singapore)
14-16 Nov 2012 (Almaty, Kazakhstan)
This course explores the structure and mechanisms of production sharing contracts (PSC’s) and the economic principles that underpin them. Studying the underlying processes and commercial drivers, participants will examine case studies to illustrate the economic structure of these complex agreements.
15-18 Oct 2012 (London, UK)
This 4-day course is designed to introduce both lawyers and nonlawyers alike to the understanding of how contracts in the oil & gas industry actually work and how to avoid and manage disputes.
17-21 Sep 2012 (London, UK)
This 5-day course is designed to introduce both lawyers and nonlawyers alike to the theories and practice of international commercial and investment arbitration in the oil & gas industry.
23-26 Jul 2012 (Paris, France)
A 4-day intermediate training course providing effective training in the critical considerations and conditions for successfully concluding Gas and LNG Sales Agreements. The course will enable you to gain an insight into the way in which Buyers and Sellers view and negotiate Gas and LNG Sales Agreements, and will give you a detailed understanding of the terms that are important in these transactions.
25-27 Jun 2012 (London, UK)
17-19 Dec 2012 (London, UK)
This Petroleum Company Performance Management training course has been designed to offer personnel from corporations and financial institutions a full complement of tools to use most effectively in developing and analysing the corporate performance measures for oil and gas companies.
20-24 Aug 2012 (London, UK)
This Euromoney Energy Training course provides a comprehensive overview of the oil and gas industry from upstream exploration and production to downstream refining, sales and marketing. You will gain an appreciation of industry dynamics and the key issues affecting its development and future. This course will provide a thorough foundation for understanding the changing industry dynamics.
17-19 Oct 2012 (London, UK)
13-15 Feb 2013 (London, UK)
This Euromoney Energy Training course provides a comprehensive overview of the oil and gas industry from upstream exploration and production to downstream refining, sales and marketing. Under the guidance of our expert course faculty, participants will gain an appreciation of industry dynamics and the key issues affecting its development and future.
10-12 Jul 2012 (London, UK)
This 3-day Euromoney Energy Training course will give you an in-depth understanding of the problems and solutions in unit formation, negotiation of participation factors and operating agreements. The role of governmental agencies in consent and oversight will also be discussed.
12-15 Jun 2012 (London, UK)
11-14 Dec 2012 (London, UK)
This practical Euromoney Energy Training course will enable delegates from all technical and commercial disciplines to understand the theories and methods used to value oil and gas prospects. The four-days will reveal the fundamental aspects of upstream petroleum economics and risk analysis. Through computer-based exercises, participants will construct economic models, incorporating relevant cash flow data for case study projects and scenarios.
10-12 Oct 2012 (Singapore, Singapore)
This course explores the structure and mechanisms of production sharing contracts (PSC's) for upstream oil and gas projects. Studying the underlying processes and commercial drivers, participants will examine case studies to illustrate the economic structure of these complex agreements.
17-20 Dec 2012 (Dubai, United Arab Emirates)
This 4 day International Oil & Gas Contracts course is specifically designed for professionals involved internationally in the oil and gas industry, it offers a unique opportunity to rapidly increase your understanding of the legal issues involved in various UK and international scenarios and to improve your techniques and skills in drafting a variety of international contracts.
3-5 Dec 2012 (London, United Kingdom)
Euromoney Energy Trainings Petroleum Sales Contracts course is designed to give attendees a comprehensive understanding of crude oil, natural gas and refined products markets and the sales contracts that are utilised for transactions through the supply chain.
23-25 May 2012 (Rio de Janeiro, Brazil)
This course explores the structure and mechanisms of production sharing contracts (PSC's) for upstream oil and gas projects. Studying the underlying processes and commercial drivers, participants will examine case studies to illustrate the economic structure of these complex agreements.
25-28 Jun 2012 (London, UK)
The four day training course offers a unique opportunity to rapidly increase your understanding of the legal issues involved in various UK and international scenarios and to improve your techniques and skills in drafting a variety of international contracts. Delegates will also learn how to effectively negotiate in concert with counsel and how to get the terms negotiated incorporated into an enforceable international oil and gas agreement.
29-31 Oct 2012 (London, UK)
This course is designed for professionals who need to develop an understanding of the unique aspects of the energy industry, including the oil and gas commercialisation and business development or facilities evaluation and commercialisation.
The course will focus on the skills required in evaluation (both buyside and sell-side), financing, acquisition, and exploitation planning for an oil and gas entity, a midstream facility or electrical generation plant.
11-13 Sep 2012 (London, UK)
This course explores the structure and mechanisms of production sharing contracts (PSC’s) for upstream oil and gas projects. Studying the underlying processes and commercial drivers, participants will examine case studies to illustrate the economic structure of these complex agreements.
This course has now expired please email us to find out when the course will next be running.