PRODUCTION SHARING CONTRACT
THEME
This Production Sharing Contract ("PSC") is entered into on [Date of Execution] by
and between the Host Country and the Contractor(s) collectively referred to as the
"Parties."
1. Introduction
1.1 Parties: This section identifies the contracting parties, including their full legal names
and addresses.
1.2 Background: Briefly describe the purpose and context of the PSC, including the location
of the Contract Area and the resource(s) to be explored and developed.
1.3 Purpose: State the primary purpose of the PSC, which is typically the exploration,
development, and production of hydrocarbon resources within the Contract Area.
2. Definitions
Provide a list of definitions for key terms used throughout the contract.
3. Exploration Phase
3.1 Exploration Period: Specify the duration of the Exploration Phase, including any
extensions and the commencement date.
3.2 Work Program and Budget: Outline the work activities and financial commitments
required during the Exploration Phase.
3.3 Rights and Obligations: Define the respective rights and obligations of the Host Country
and the Contractor during the Exploration Phase.
3.4 Cost Recovery and Profit Sharing: Describe how exploration costs will be recovered
and how profits, if any, will be shared between the Parties.
4. Development and Production Phase
4.1 Development Plan: Outline the plan for developing and producing hydrocarbon
resources, including timelines, milestones, and technical specifications.
4.2 Production Phase: Describe the duration of the Production Phase, including any
extensions and the commencement date.
4.3 Rights and Obligations: Define the respective rights and obligations of the Host Country
and the Contractor during the Development and Production Phase.
4.4 Cost Recovery and Profit Sharing: Explain how development and production costs will
be recovered and how profits, if any, will be shared between the Parties.
4.5 Royalties and Taxes: Specify any royalties, taxes, or other fiscal obligations applicable
to the Contractor.
5. Environmental and Safety
5.1 Environmental Protection: Detail the environmental protection measures and
requirements the Contractor must adhere to throughout the contract's duration.
5.2 Health and Safety: Specify health and safety guidelines and obligations for all
operations.
5.3 Abandonment and Decommissioning: Outline the procedures and financial
responsibilities for abandoning and decommissioning facilities at the end of the contract.
6. Dispute Resolution
6.1 Dispute Resolution Mechanism: Describe the process for resolving disputes between
the Parties.
6.2 Governing Law: Specify the governing law for interpreting and enforcing the contract.
6.3 Arbitration: If arbitration is the chosen dispute resolution method, provide details
regarding the arbitration process.
7. Confidentiality
Include provisions regarding the confidentiality of information exchanged between the
Parties.
8. Termination
Describe the circumstances and procedures for terminating the contract.
9. Miscellaneous Provisions
Include various standard clauses, such as force majeure, amendment procedures, entire
agreement clause, notice requirements, governing language, counterparts, and headings.
10. Execution
Include space for the authorized representatives of the Host Country and the Contractor(s) to
sign and date the contract.
Appendices
Attach any relevant appendices that provide additional details, such as maps, technical
specifications, or financial models.
PRODUCTION SHARING CONTRACT
EXAMPLE
Production Sharing Contract
Between
[Host Country Name or Entity]
(Hereinafter referred to as the "Host Country")
And
[Contractor(s) Name(s)]
(Hereinafter referred to as the "Contractor")
Date: [Date of Execution]
Table of Contents
1. Introduction 1.1 Parties 1.2 Background 1.3 Purpose
2. Definitions
3. Exploration phase 3.1 Exploration Period 3.2 Work Program and Budget 3.3 Rights and
Obligations 3.4 Cost Recovery and Profit Sharing
4. Development and Production Phase 4.1 Development Plan 4.2 Production Phase 4.3
Rights and Obligations 4.4 Cost Recovery and Profit Sharing 4.5 Royalties and Taxes
5. Environmental and Safety 5.1 Environmental Protection 5.2 Health and Safety 5.3
Abandonment and Decommissioning
6. Dispute Resolution 6.1 Dispute Resolution Mechanism 6.2 Governing Law 6.3
Arbitration
7. Confidentiality
8. Termination
9. Miscellaneous Provisions 9.1 Force Majeure 9.2 Amendments 9.3 Entire Agreement 9.4
Notices 9.5 Governing Language 9.6 Counterparts 9.7 Headings
Appendices:
Appendix A: Description of Contract Area
Appendix B: List of Equipment and Facilities
Appendix C: Cost Recovery Mechanism
Appendix D: Profit Sharing Formula
Appendix E: Environmental Impact Assessment
Appendix F: Health and Safety Guidelines
