Psc Agreements

[3] Under production-sharing agreements, the government of the country allocates exploration and production activities to an oil company. The oil group bears the mineral and financial risk of the initiative and explores, develops and produces the field as needed. A long time ago, a concession meant that the prospector became the owner of the resources within the concession area (UK North Sea) and for a partial period of up to 75 years. Over the years, concessions have been scarce, which has given way to production-sharing agreements, etc. The government wants to earn revenue from the beginning of exploration. Payments to the government sometimes include a bonus payment upon conclusion of the contract. This can be a standard bonus, but there are also auction rounds in which the highest bidder gets the deal. Thus, in 1969, companies spent a total of about $900 million on signing concessions on the Alaska North Slope (Weissler, 2019). There may also be a discovery bonus. A more regular, but smaller, income comes from concession rents, a royalty per hectare or per square kilometer. Since some companies may obtain a concession, but do not intend to explore the concession, but to resell the concession, a government may impose spending obligations in the form of a minimum of geophysical expenditure and a minimum number of exploration-rich drilling. .

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