Author: bomuo

When governments try to capture the upside in a production sharing contract to allow them to benefit if oil prices increase

Under a typical production sharing agreement, the contractor is responsible for the field development and all exploration and development expenses. In return the contractor is entitled to a share of the remaining profit oil or gas. The contractor receives payment in oil or gas production and is exposed to both technical and market risks

The amount of production after deducting cost oil production allocated to costs and expenses that will be divided between the participating parties and the host government under the production sharing agreement.

Production remaining after allowable cost recovery is commonly referred to as profit oil, profit gas, or profit petroleum and is usually shared between the state and the investor