Economic Aspects of Production Sharing Contracts

Audience

The course is designed for those working in the upstream industry who are not familiar with PSCs and who require either a working or practical knowledge of the financial mechanics and economic aspects of the contracts.

Content

  • Understand the principles of economic analysis (cashflow, cost of capital, NPV, rate of return etc)
  • Application of sensitivity analysis to incorporate risk
  • Understand the structure of the PSC contract and comparison with the tax/Royalty fiscal system
  • Calculations of cost recovery and specific issues to consider
  • Learn about bonuses and bonus calculations
  • Examine sliding scale fiscal mechanisms including R Factor and rates of return methods
  • Calculation of taxation including allowances, depreciation and tax losses
  • Understand profit sharing
  • Taking advantage of tax and PSC ring fencing terms to add value to the asset
  • Booking of reserves in a PSC (including tax barrels)
  • Contractor/Government/National Oil Companies relationship: cost carries, fiscal take
  • How to optimize fiscal terms from both contractor and government perspective
  • Construction of a production sharing contract spreadsheet model, the derivation of relevant economic metrics, application of sensitivities and the drawing of conclusions to aid decision-making

Duration

3-day

Number of Participants

Max 20

Prerequisites

Excel™: working knowledge

Software Used

None

Course Format

Classroom delivery with presentations, practical exercises and modelling workshop

Audience

The course is designed for those working in the upstream industry who are not familiar with PSCs and who require either a working or practical knowledge of the financial mechanics and economic aspects of the contracts.

Content

- Understand the principles of economic analysis (cashflow, cost of capital, NPV, rate of return etc)
- Application of sensitivity analysis to incorporate risk
- Understand the structure of the PSC contract and comparison with the tax/Royalty fiscal system
- Calculations of cost recovery and specific issues to consider
- Learn about bonuses and bonus calculations
- Examine sliding scale fiscal mechanisms including R Factor and rates of return methods
- Calculation of taxation including allowances, depreciation and tax losses
- Understand profit sharing
- Taking advantage of tax and PSC ring fencing terms to add value to the asset
- Booking of reserves in a PSC (including tax barrels)
- Contractor/Government/National Oil Companies relationship: cost carries, fiscal take
- How to optimize fiscal terms from both contractor and government perspective
- Construction of a production sharing contract spreadsheet model, the derivation of relevant economic metrics, application of sensitivities and the drawing of conclusions to aid decision-making

Learning Objectives

Duration

3-day

Number of Participants

Max 20

Prerequisites

Excel: working knowledge

Software Used

None

Course Format

Classroom delivery with presentations, practical exercises and modelling workshop

Find Out More

CGG GeoTraining offers the most comprehensive industry training based on years of practical experience acquired by our personnel.

Our proprietary courses are fully customizable and can be offered at a time and location convenient to you. Please request a course for more information.