Services
PSC (Production Sharing Contract) with Navigator Petroleum Consulting
International PSC (Production Sharing Contract)
Production Sharing Contracts (PSCs) are agreements between a government and oil companies that outline the exploration and production of hydrocarbons within a specific area. Under a PSC, the government retains ownership of the resources, while the oil company assumes the financial and operational risks associated with exploration and production. Once production commences, the extracted hydrocarbons are divided into two portions: "cost oil," which allows the company to recover its operational expenditures, and "profit oil," which is shared between the government and the company based on predetermined terms.
Auditing Net Hydrocarbon Accounts, on behalf of foreign governments, commonly referred to as Cost Oil or Cost Recovery Accounts, is essential in PSCs to ensure compliance and operational efficiency. These audits verify that the costs claimed by the oil company align with contractual agreements and regulatory standards, preventing overstatement of expenses and ensuring accurate profit sharing. By meticulously examining financial records and operational reports, auditors confirm that both the government and the company receive their fair share of the produced hydrocarbons, thereby maintaining transparency and fostering trust between the contracting parties.
What are the Benefits of Production Sharing Contracts
Production Sharing Contracts in Calgary
For International Oil Companies
- Resource Access: PSCs grant IOCs the rights to explore and produce hydrocarbons in regions that may otherwise be inaccessible, expanding their operational portfolios.
- Cost Recovery: The structure of PSCs allows IOCs to recover exploration and development costs from production revenues, reducing financial exposure.
- Profit Sharing: After cost recovery, IOCs share in the profit oil, aligning their interests with the host country and potentially leading to significant returns.
For Host Countries
- Risk Mitigation: PSCs enable host nations to develop their hydrocarbon resources with minimal financial exposure, as IOCs assume the exploration and production costs.
- Technology Transfer: Collaboration with IOCs facilitates the transfer of advanced technologies and expertise, enhancing the host country's capabilities in the oil and gas sector.
- Revenue Generation: PSCs provide structured revenue streams through mechanisms like royalties and profit oil shares, contributing to the host country's economic development.
What Navigator Petroleum Specializes In
Navigator Petroleum specializes in the following areas, providing tailored solutions to enhance financial accuracy and regulatory compliance in the oil and gas industry:
Allocation of General and Administrative (G&A) Expenses:
Allocation of Head Office and Affiliate Charges:
Withholding Tax Gross-Ups:
Liftings & Entitlements (if product taken in kind):
Our services include tracking and verifying the physical volumes of hydrocarbons lifted and the corresponding entitlements, ensuring that each party receives its due share as per contractual agreements.
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Depreciation:
Partner Added Costs:
Transfer Pricing Utilized by the Contractors:
Why Choose Navigator Petroleum for Your Production Sharing Contracts
Our leadership has conducted audits and consulting services in more than 30 countries, including Equatorial Guinea, where we audited every contractor and subcontractor in the oil and gas sector. Our team comprises seasoned professionals with backgrounds in corporate income tax, financial accounting, and joint venture auditing.
This wealth of experience ensures that we provide comprehensive and tailored services to meet the unique needs of each client. By choosing Navigator Petroleum, you partner with a firm that combines extensive industry knowledge, a global perspective, and a commitment to excellence, ensuring that your PSCs are managed with the highest level of professionalism and expertise.