Oil and gas fiscal designs and systems

Day One – Key features of upstream licence agreements
• Upstream fiscal designs: their objectives and concepts
• Contrasting host government and international oil company perspectives
• Concepts of economic rent and why governments seek to optimise it
• Petroleum legislation and issues it needs to address
• Review the content of a generic petroleum law
• Title to resources, legal jurisdiction and offshore complexities
• Mineral interest agreements: concessions, licences and leases
• Production sharing contracts (PSCs): origin, rationale and structure
• Review content of a model production sharing contract
• Establishing title to resources and reserves
• Work and financial commitments, guarantees and schedules
• Contract durations and relinquishment schedules
• Progressive and regressive taxation mechanisms
• Spectrum of taxation instruments applied
• Fiscal stability versus instability and asset appropriation
• Flexible drivers and sliding scales to adjust fiscal instruments
• Cost recovery mechanisms: cost oil and gas, uplift and amortisation

Day Two – Establishing meaningful and workable contracts
• Competitive bidding rounds, ‘Winner’s curse’ versus bidding realities
• Review of competitive bidding case studies
• Signature and other bonuses
• Managing E&P licence agreements: accountability and control issues
• Purpose of the Joint Operating Agreement (JOA)
• Review the content of a model JOA
• Authorising and budgeting for expenditure
• Joint venture operating and accounting principles
• Authority for expenditure, cash calls, liftings and billings
• Procurement and tendering issues
• Foreign exchange and cost allocation
• Limits on cost recovery, production allocations and tax allowances
• Ring fencing of costs and revenues
• Interface with supplier and service company agreements

Day Three – Managing and financing upstream contracts
• Comparison of generic fiscal designs from selected countries
• Local content, indigenous suppliers and community issues
• Operating and management committees and voting rights
• Integrating other contracts with upstream licensing terms
• Farmout agreements: roles of farmor and farmee
• Review the content of model farmout agreement
• Unitisation agreements and case studies
• The regressive nature of royalties and options to make mitigate it
• Progressive taxes and their impacts on fiscal performance
• Options for financing field developments and contractual issues
• Loan interest tax treatments: deductions, allowances and credits
• Contractual risks and how to address them
• Clauses specific to gas, condensate and natural gas liquids (NGLs)
• Oil price caps, posted oil and gas prices and domestic supply obligations

Day Four – Dealing with state involvement and disputes
• Carried interests, back-in and buy-back concepts
• Equity participation involving state-owned companies
• NOC and IOC relationships and joint ventures
• Rights of assignment, pre-emption and divestment issues
• Some governments invoke their rights of pre-emption
• Planning negotiations
• Negotiating strategies and tactics to achieve workable terms
• Team negotiations
• Cultural issues impacting contract negotiations
• Sole risk and non-consent options
• Dispute resolution and arbitration
• Approval of field developments and other work programme
• Safety, environment, decommissioning and trailing liability issues
• Documentation and learning from contractual experience