Business and Corporation Law : Production Sharing Contract

Running Head: BUSINESS AND CORPORATION LAW
0
Oil and Gas contract law
3/18/2020
Student’s Name

Oil and Gas Contract Law 1
Contents
Outline and introduction..................................................................................................................2
Production Sharing Agreement........................................................................................................2
Features of PSC...............................................................................................................................4
Conclusion.......................................................................................................................................6
Bibliography....................................................................................................................................8
Books/Journals 8
Other Resources 8

Oil and Gas Contract Law 2
Outline and introduction
A contract is an important aspect of each business that decides the rights and liabilities of parties.
Contracts are required to be there to ensure that each party is working in a determined manner
and in case of a breach can be held accountable for penalties and other liabilities. An entity
enters into different types of contracts considering size, nature, business activity, industry
standards and other elements. The focus of the report is likely to be centered around “production
sharing contract”, which is a specific type of agreement in resource extraction companies. The
objective of the report is to understand the significance of such contracts and the reason for that
they are preferable in developing countries, To provide an outline of the report this is to state that
the same would contain features as well as the reason for the effectiveness of production sharing
contract (PSC) in developing counties. In addition to this, some real examples are alsos presented
in this report.
Production Sharing Agreement
To understand preference of PSC, it is important to understand meaning of PSC. This is to state
that PSC is a common type of contract that used to develop between resource extraction
company and government of the country in which the extraction work is being carried out1. This
agreement outlines how many shares each party will be entitled to receive out of extraction
activity. This kind of agreement is being significant in international petroleum operations and
becoming the most common form of contract between developing countries and international oil
companies. It is well known that the developing countries are financially as well as
technologically incapacitated hence in such a situation they engage international oil companies.
1 (Uk.practicallaw.thomsonreuters.com, 2020) <https://uk.practicallaw.thomsonreuters.com/4-502-1566?
transitionType=Default&contextData=(sc.Default)&firstPage=true&bhcp=1> accessed 18 March 2020.