Journal of Finance and Accounting
ISSN (Print): 2333-8849 ISSN (Online): 2333-8857 Website: http://www.sciepub.com/journal/jfa Editor-in-chief: Apply for this position
Open Access
Journal Browser
Go
Journal of Finance and Accounting. 2014, 2(2), 34-40
DOI: 10.12691/jfa-2-2-2
Open AccessArticle

A Comparative Analysis of Production Sharing Contracts of Selected Developing Countries: Nigeria, Indonesia, Malaysia and Equatorial Guinea

SANI SAIDU1,

1Aberdeen Business School, Robert Gordon University Aberdeen, United Kingdom

Pub. Date: May 28, 2014

Cite this paper:
SANI SAIDU. A Comparative Analysis of Production Sharing Contracts of Selected Developing Countries: Nigeria, Indonesia, Malaysia and Equatorial Guinea. Journal of Finance and Accounting. 2014; 2(2):34-40. doi: 10.12691/jfa-2-2-2

Abstract

Maximization of returns and benefits are the major determinants state considers for adopting particular petroleum fiscal regime in the course of exploiting its petroleum resources. Two major fiscal regimes are adopted for exploiting petroleum resources: Joint venture agreement (JVA) and production sharing contract (PSC). However, considering the inherent difficulties associated with Joint venture agreements, developing countries gave emphasis to production sharing contract. This study aims to compare expected returns from exploiting petroleum resources of selected countries (Nigeria, Indonesia, Malaysia and Equatorial Guinea) that have adopted the Production Sharing Contracts. A literature based methodology was adopted, and indeed, data were gathered from the PSC treaties and related documents. The findings suggest that Nigerian PSC provides less return compared to its contemporaries. Indeed, the results showed that Malaysia received the highest returns, followed by Indonesia and Equatorial Guinea. On the other hand, the findings justified the underlying hypothesis of socio-economic factors help shape the terms and conditions of oil and gas contracts in developing countries particularly production sharing contract.

Keywords:
comparative analysis production sharing contracts joint venture agreement

Creative CommonsThis work is licensed under a Creative Commons Attribution 4.0 International License. To view a copy of this license, visit http://creativecommons.org/licenses/by/4.0/

References:

[1]  Aspinall, E. and Berger, M. T, 'The Break-up of Indonesia? Nationalisms after Decolonization and the Limits of the Nation-State in Post-Cold War Southeast Asia', Third World Quarterly, 22(6). 1003-1024, 2001.
 
[2]  Ayoola, E, Why we Opted for Production Sharing Contract. Punch, 2005. Available at http://www.punchng.com/oilgas/article07 access on 03/03/2005. [Accessed on 10/10/2013].
 
[3]  Barrows, G. H, Worldwide Concession Contracts and Petroleum Legislation. Pennwell Books, Tulsa. 1993.
 
[4]  Ameh, M.O.The Shift from Joint Operating Agreement to Production Sharing Contracts in the Nigerian Oil and Gas Industry: Any Benefit for the Players? The Centre for Energy, Petroleum and Mineral Law and Policy Annual Review. February 2007. pp. 27.
 
[5]  Brock, H.R., Carnes, M.Z., and Justice, R, Petroleum Accounting: Principles, Procedures, & Issues. 6th ed. Texas: Professional Development Institute. 2007.
 
[6]  Economic Planning Unit (EPU), Prime Minister’s Department Malaysia: Recent Economic History. 2007 Available at: http://www.epu.jpm.my/New%20Folder/development%20policies/RecentEconomicHistory.htm[accessed on 30/07/2013]
 
[7]  Energy Information Administration (EIA), Country Analysis Briefs. “Equatorial Guinea”. 2014. Available at http://www.eia.doe.gov/emeu/cabs/eqguinea.html. [Accessed 20/02/2014].
 
[8]  Energy Information Administration (EIA),Country Analyses Briefs; “Malaysia” 2014. Available at http://www.eia.doe.gov/emeu/cabs/Malaysia/Background.html[Accessed 25/01/2014].
 
[9]  Energy Information Administration (EIA), Country Analyses Briefs. “Indonesia”2014 Available at http://www.eia.doe.gov/emeu/cabs/Indonesia/Profile.html[Accessed 4/01/2014].
 
[10]  Equatorial Guinea Production Sharing Contract, Barrows Company Inc. 2005. New York 2007.
 
[11]  Frynas, G. J, “The Oil Boom in Equatorial Guinea”, African Affairs, 103/413, pp534.2004.
 
[12]  Frynas, G. J, Political Instability and Business: Focus on Shell in Nigeria. Third World Quarterly, Vol. 19 (3). pp 457-478. 1998.
 
[13]  Frynas, G. J. Mellahi, K, Political Risk as Firm-Specific (Dis) Advantage: Evidence on Transnational Oil Firms in Nigeria. Thunderbird International Business Review, Vol. 45(5) 541-565. 2003.
 
[14]  Gale, B. Petronas: Malaysia’s National Oil Corporation. Asian Survey, Vol. 21 (11) pp.1129-1144. 2007.
 
[15]  Gidado, M. M, Petroleum Development Contracts with Multinational Oil Firms: The Nigerian Experience, Ed-Linform Services: Maiduguri. 1999.
 
[16]  Johnston, D, International Exploration, Economics, Risk and Contract Analysis. Penn Well Corporation. 2003.
 
[17]  Johnston, D, International Petroleum: Fiscal Systems and Production-Sharing Contracts, Penn Well Publishing, Tulsa, OK. 1994.
 
[18]  Lukman, R, Keynote Address by the Honourable Minister of Petroleum Resources on the Proposed Petroleum Industry Bill (PIB).Abuja, 16 July, 2009.
 
[19]  McSherry, B, “The Political Economy of Oil in Equatorial Guinea”. Journal of African Studies. Vol. 8(3). 2006.
 
[20]  Mishra, S. 'History in the Making - A Systemic Transition in Indonesia', Journal of the Asia Pacific Economy, 7(1). Pp, 1-19. 2002.
 
[21]  Pongsiri, N. Partnerships in Oil and Gas Production-Sharing Contracts, International Journal of Public Sector Management Vol. 17(5). 2004.
 
[22]  Silverstein, K, Oil Boom Enriches African Ruler. Global Policy Energy. 2003. Available at http://www.globalpolicy.org/security/natres/oil/2003/0122gui.htm [Access 17/09/2013].
 
[23]  Yumiseva, H, Can Production Sharing Contract Promote Transparency in Management of Oil and Gas Income? A Case Study of Equatorial Guinea. Oil, Gas and Energy Law Intelligence Vol. 3(1). 2005.