Evaluating Production Sharing Agreements in the Oil and Gas Industry

The essay critically analyzes Production Sharing Agreements (PSAs) in the context of the oil and gas industry by comparing them with service contracts. PSAs are highlighted as a favorable model that allows host countries to benefit from resource extraction without upfront investment, maintaining control over production processes. The analysis delves into their advantages over service contracts, which require significant financial commitments from the host country. Various references provide insights into global practices and economic theories underlying these agreements. The discussion underscores PSAs' strategic importance in ensuring mutual benefits for both governments and oil companies by aligning interests towards maximizing resource recovery while managing risks.