Production Sharing Contracts Module 1 & 2

This 5-day course provides you with critical information to create the right commercial framework for successful PSC negotiations

Location: Singapore

Venue: Hotel Jen Tanglin, Singapore (Check The Map)

Starts: 31 Aug 2020

Ends: 04 Sep 2020

Type: Course

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A Global Course for State-of-the-Art Theory, Practice & Techniques in Fiscal System Analysis & Design

The Production Sharing Contracts (PSC) course provides critical information to create the right commercial framework for successful PSC negotiations. It examines state-of-the-art practice and techniques in fiscal system, analysis and design.

Any type of ‘extractive industry’ will come under the realm of the course including coal, gold & rock mining, geothermal, coal-bed methane, conventional oil & gas, shale oil & gas, deepwater, enhanced oil recovery, LNG & gas-fired power generation. And that is because the PSC course goes way beyond just PSCs. It covers:

  • All types of fiscal/contractual arrangements that govern business relationships between oil companies and
  • Strong fundamental elements of normal petroleum operations, production & revenue generation, cost
    recovery and division of profits
  • Numerous variations on the basic themes such as royalty/tax, PSC and Service Agreements, Risk Service
    Contracts, rate of return systems & R-factors, ringfencing, relinquishment, bonuses & goldplating.


Click here for other venues where the PSC Course will be held in 2020.

Course Outlines

Module 1

  • Theory of Economic Rent
  • Taxation Theory related to the Petroleum Industry
  • Calculating Contractor Take: The Common Denominator
  • Negotiation of Commercial Terms: Key Aspects
  • Concessionary (Royalty/Tax) Systems
  • Production Sharing Contracts
  • Variations of the PSC Theme
  • Risk Service Contracts
  • Rate of Return Contracts
  • Joint Ventures
  • Technical Assistance/EOR PSCs
  • Threshold Field Size Analysis
  • The Global Market For Exploration Acreage
  • Worldwide Fiscal Systems

Module 2

  • Introduction to Petroleum Economics & Analysis
  • Cash Flow Modelling & Analysis
  • Expected Value Theory
  • Exploration Threshold Field Size Analysis
  • Development Threshold Field Size Analysis
  • Exercises will include:
    • Value of Discovery Exercise –
    • Value of Reserves-in-the-Ground Exercise
    • Dynamics of the Savings Index
    • Government Participation Analysis
    • Rate-of-Return Systems

Course Directors (any one course director per venue)

Course Objectives

Module 1

The modern day PSC has evolved into a complex contractual document governing risks and rewards inherent in oil exploration. With volatile prices and changing geopolitical scenarios, it is vital to understand not only the changing terminology and semantics of the PSC but also how fiscal systems have evolved, their economic and financial impact. PSCs in over 45 countries will be examined. A must for all senior managers in new ventures, exploration, corporate planning, geology, as well as petroleum negotiators, oil company legal counsel, advisers, geologists and engineers.

Module 2

An additional session on the 4th/5th day of the course will feature practical computer-based basics of petroleum risk analysis and decision theory, progressing to the finer points of economic modelling in the international arena.


What You Will Learn

Module 1

Detailed Assessment of Worldwide Fiscal Systems 
Get a detailed assessment of worldwide fiscal systems, industry metrics, trends and variations in:

  • PSCs/PSAs, Royalty/Tax Systems, Service Agreements, Risk Service Contracts, EOR PSCs
  • Negotiation & Commercial Terms
  • Government & Contractor Take, Effective Royalty Rate
  • Rate of Return Systems & R-Factors
  • Ringfencing, Relinquishment, Bonuses, Goldplating
  • Global Market for Exploration Acreage
  • What are the biggest concerns of National Oil Companies?

Plus Exercises on

  • Calculating government take
  • Effective royalty rates
  • Cash flow audits
  • Value of reserves
  • Savings index
  • Government participation
  • Lifting entitlement (‘booking barrels’)
  • Sliding scales

Module 2

Exerciseswill include

  1. Cash Flow Audit Exercise which will provide insight into the inner workings of a basic economic model for exploration or for field development feasibility studies
  2. Value of a Discovery Exercise – depending on costs, prices and fiscal terms a discovery can hold a range of values. This exercise will bring this to life
  3. Value of Reserves in-the-ground Exercise – this important exercise will show the diversity of values that exist for reserves and/or “rights to extract”
  4. Dynamics of the Savings Index – this important exercise will show how we can quantify the incentive for a company to keep costs down and the magnification of this incentive when time value of money is considered
  5. Government Participation Analysis – this is the source of too much controversy in the industry, this exercise will put this to rest
  6. Rate-of-Return Systems – do they really create a incentive to “gold plate”? One way to find out

An additional Workbook will be provided as part of the 4th/5th day curriculum. A spreadsheet containing modules for performing cash
flow analysis for most of the mainstream types of fiscal systems including:

  • Systems with “R factors”
  • Rate-of-Return (ROR) based systems
  • Production Sharing Agreements, as well as
  • Royalty/Tax systems and Service Agreements will be provided.

A working knowledge of Excel is a requirement for participants attending the 4th/5th day sessions for Module 2.

Study Aids


Who Should Attend

International & Government Negotiators

Corporate/Strategic Planners

Policy/ Economic/Financial Analysts

Legal Advisors & In-House Counse

Finance Directors & Managers

Accountants & Financial Controllers

Tax & Finance Advisors

Production & Reservoir Managers

Media Sponsor


Special fees are available for group attendance

This course can also be arranged as an in-company program.  Please get in touch with us for more information.

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+65 6338 0064
+65 6338 4090

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