Review of public policies, legislation and regulations. Production sharing agreements mpsas, which have guided the. Model production sharing contract under the petroleum act. Key terms contained in the mpsa 20 are summarised below1. Snjdz production sharing contract psc, the tanzanian pscror hybrid. Boma masters in international and comparative lawtranscultural business faculty of law, university of lapland autumn, 20. Whereas the model production sharing agreement from 1989 had operated with up to 50%. Development licenses require the transfer of management and operation functions to tanzanian. Suggestions for a better framework to benefit the country. When it involves the period of gas sales agreement which is.
To view this article you need a pdf viewer such as adobe. May 20, 2014 abstract governments choose among many contracts to delegate the exploration and the extraction of oil. It was even speculated that there were even highly controversial amendments to the agreement. Tanzanian citizens and suppliers to participate in the petroleum sector. Local content the added value brought to the hydrocarbon resources of the united republic of tanzania through the participation and use of national. Openoil has created similar almanacs for other countries across the.
Taxation the contractor shall be subject to tanzanian taxes. How to effectively answer law essay questions latest law. Fiscal challenges of tanzania s production sharing agreements psas zitto kabwe, mp and chairman pac dar es salaam, september 2014 introduction the recent leak of the natural gas terms agreed with statoil exxonmobil is an opportunity to examine whether our country will adequately benefit from our. Tanzania paid dearly for nondisclosure of oil contract. This production sharing agreement the agreement is made on. While making good progress in developing its tanzanian projects, the company is actively seeking to expand its operations beyond tanzania. Tanzania oil and gas 4th licensing round and 20 model production sharing agreement. Production sharing agreements vs service contracts from the view of an ioc. The early concession system gave the host government no say in the exploration and production program. Tender protocol and model of the production sharing agreement. The politics of gas contract negotiations in tanzania.
Production sharing agreements psa are among the most common. Public concern over the fairness of these agreements was ignited in july this year when a 2012 addendum to a 2007 production sharing agreement between statoil and the tanzanian government was leaked to the public. Tanzania is entitled under international law, including petroleum underlying the area described in annex a hereof, is vested entirely and. An empirical analysis 5 production sharing agreements 1966b98 5. Leaked agreement shows tanzania may not get a good deal for gas by ben taylor. Agreement or the agreement means this production sharing agreement executed among the government, tpdc and abc, including its annexes. In 1989, a model production sharing agreement mpsa was introduced to guide the negotiations with private companies killagane, undated a. Readers should take legal advice before applying it to specific issues or transactions. Tanzania enacts legislation impacting the oil and gas ey.
Model psc under the petroleum act page 2 production sharing contract dated this agreement is a production sharing contract made under the petroleum act between the, acting on behalf of the democratic republic of timorleste the ministry. Tanzanias new regime on oil and gas laws legal analysis by. Tanzania oil and gas 4th licensing round and 20 model. Pura will develop and submit to the minister a model of production sharing agreement or any other model agreement to be approved by cabinet. In the case of tanzania, it has been reported worldwide that the government had no intention of releasing its production sharing agreement psa which was signed with statoil of norway in partnership with usa oil giant, exxonmobil. The overview of the legal and institutional framework for. Undoubtedly, the future economy of tanzania depends on extractive industry as means of economic expansion being both a usable resource as well as a commodity for. One of the essential tools for management of the sectors including the oil and gas sector is the legislative and institutional structure. In april, swala oil and gas declared force majeure under the terms of its kilosakilombero production sharing agreement with government and tpdc, saying it was disappointed and frustrated by the demand for it to undertake a special environmental impact assessment eia of the likely implications for the proposed stieglers gorge. An application of the principalagent model appendix 4. Sep 10, 2017 this geologically picturesque nation of eastern africa paid highly for keeping a production sharing agreement psa with statoil of norway in partnership with exxonmobil under lock and key. Undoubtedly, the future economy of tanzania depends on extractive industry as means of economic expansion being both a usable resource as well as a commodity for international trade and finance. Crucially, whether the state opts for the licence and tax model or the psa model, the risk that.
Components of production sharing contract in kenya oilnewskenya. For this licensing round, the got has published a new 20 model production sharing agreement the mpsa. Mpsa model production sharing agreement ndp national development plans ngos non governmental organizations. Pdf an overview of the oil and natural gas revenue. Scope this contract is a production sharing contract, the scope of which is the exploration, appraisal, development and production of hydrocarbons in the contract area and the supply of required infrastructure within and outside of the contract area up to the. Through pscs, our partner bear exploration, development and production costs in return for an agreed share of production. Tzs tanzanian shilling unep united nations environmental programme usd united states dollar vat value added tax wcf workers compensation fund. Governments sometimes use model contracts to guide the formation of actual psas with companies. Protase ishengoma dla piper africa in tanzania immma. Production sharing agreements versus concession contracts julie ing. In fact, it took the efforts of some really brave anticorruption advocates to leak the contract to the parliament of tanzania in 2014.
Apr 16, 20 production sharing agreements vs service contracts from the view of an ioc. Jul, 2015 licensing of petroleum exploration blocks, is governed by the petroleum exploration and production act chapter 308 of the laws of kenya. Nigeria, indonesia, malaysia and equatorial guinea. Here is an example of a sample high firstclass law essay from an oxbridge postgraduate student which should give you an understanding of how to effectively answer law essay questions at uni. Government participation and local content the government can participate through the national oil company. In this article tanzanian law firm breakthrough attorneys offers an extensive analysis of tanzanias new oil and gas legal framework, with the recently entacted petroleum act 2015. Agreement or the agreement means this production sharing agreement executed between sonangol and contractor group, including its annexes. Tanzanias new regime on oil and gas laws legal analysis by breakthrough attorneys. Production sharing agreements vs service contracts from the. Pura is to develop a model production sharing agreement psa to be approved by the cabinet.
This mpsa replaces the earlier 2008 model production sharing agreement. August 2014 david manley and thomas lassourd executive summary the leak in july 2014 of an important addendum to a production sharing agreement psa between norwegian national oil company statoil and the government of tanzania has ignited a debate on. The contractual form changes between and within countries but the most common contracts are concession contracts and production sharing agree. The sharing in production sharing contracts extends beyond oil and gas. Update tanzania bill establishing the petroleum act 2015. The tanzanian government through the ministry of women, children and community development is. A comparative analysis of production sharing contracts of selected developing countries. Exploration opportunities production sharing contract overview.
If production reaches 1,000 million cubic feet per day. Model psc 4 february 2007 article 1 scope and definitions 1. Tanzanias new regime on oil and gas laws legal analysis. Production sharing agreements psas or production sharing contracts pscs are a common type of contract signed between a government and a resource extraction company or group of companies concerning how much of the resource usually oil extracted from the country each will receive. We note that both the current act and model product sharing agreement hereinafter psa are into question regarding the indigenous legal right of ownership. New production sharing agreement for tanzania ashurst. Tanzania, or to which the united republic of tanzania is entitled under international. In many ways the 1989 mpsa represents a move towards a more. Fiscal challenges of tanzanias production sharing agreements psas zitto kabwe, mp and chairman pac dar es salaam, september 2014 introduction the recent leak of the natural gas terms agreed with statoil exxonmobil is an opportunity to examine. Part i scope and interpretation 1 scope this contract is a production sharing contract, in accordance. All contracts are based on a model production sharing contract psc issued as a schedule to the regulations issued under section 6 of the act. How to scrutinise a production sharing agreement a guide or the oi and gas sector ased on eerience rom the asian egion 2012. Review of public policies, legislation and regulations pertaining to the. The fundamental distinction between psc and rt regimes lies in the.
Tanzania enacts legislation impacting the oil and gas industry executive summary. This addendum shall form part of the production sharing agreement between the government of the united republic of tanzania. Training provisions dedicated to government and tanzanian petroleum and development corporation tpdc personnel at the exploration license level. Managing natural resources for sustainable growth and. Procedurally in most jurisdictions these consents come in one of two forms. Leaked agreement shows tanzania may not get a good deal.
Production sharing agreements mpsas, which have guided. Managing natural resources for sustainable growth and human develop ment in t anzania the case of extractive industry by dr. The acquisition marks ottos entry into the exciting east african rift valley, which is historically underexplored but widely accredited as having significant exploration potential. Production sharing agreements psas in the first instance, but nonetheless will. Tanzanias new regime on oil and gas laws breakthrough. Application for production sharing agreement to allow horizontal wells to cross lease lines page 1 as of oct 5, 2018. State, on behalf of the people of tanzania, and tpdc contracts a private oil and. The model behind the songo songo gas project was highly complex. The purpose of this paper is to model chinas offshore production sharing contracts using a probabilistic approach. Tanzanian government had established in 2010 as a benchmark for its future natural gas negotiations, and it is only reasonable for tanzanias citizens and their representatives to ask the. Tanzanias model psa serves as the basic document for negotiations between foreign oil companies, the.
Due diligence on possible acquisition of a hydropowergenerating company in tanzania. Tanzania introduces new model production sharing agreement and mozambique prepares to. The somalian government, financed by the african development bank afdb, in the drafting of the model production sharing agreement and a negotiation matrix. Tanzania dtis 2017 v i 87 market structure and trends 87 largescale mining 92 artisanal and smallscale mining 96 gas sector 98 development challenges 98 weak businessenabling environment constraints in the ei sector and its links 99 unclear regulatory framework to create upstream links 101 downstream beneficiating policies may have unintended consequences. One of the main purposes of the production sharing contract system is to exert state control over the. Royalty, therefore, becomes a part of total net revenue of the state from the 1 according to the federal law no. Psas are entered into with tanzania petroleum development. Secondly, the state may adopt a production sharing agreement psa approach in which it enters into contracts with foreign companies which, similar to a licence, permit the compan ies to explore for and, if successful, to develop and produce oil and gas. License holders and contractors shall every year prepare a joint. Production sharing agreements vs service contracts from. Tanzanias 20 model production sharing agreement mpsa 20, which was unveiled at the launch of the licensing round, will form the basis for psas negotiated between successful bidders and the government of tanzania. Fiscal challenges of tanzanias production sharing agreements psas zitto kabwe, mp and chairman pac dar es salaam, september 2014 introduction the recent leak of the natural gas terms agreed with statoil exxonmobil is an. Key terms contained in the mpsa 20 are summarised below 1.
Production and costs of a unitized field to be allocfield to be. By then, oil prices were low and almost all exploration companies had left tanzania. Royalty is allocated before production sharing is calculated. Aug 10, 2015 tanzanias new regime on oil and gas laws. The addendum establishes some changes to a production sharing. Production sharing agreements versus concession contracts. Modeling chinas offshore production sharing contracts. A variety of psc terms are designed to encourage an optimal level of investment based on the complexity of petroleum resources. Mpsa model production sharing agreement mem ministry of energy and minerals mof ministry of finance. Production sharing contracts production sharing contracts or agreements psc hereafter are ubiquitous in much of asia, africa and the middle east, with only a handful of countries in these regions adopting a royaltytax or concession rt regime or some hybrid. The draft tender protocol of the 2nd bidding round of production sharing, which release was published in the federal official gazette on july 5, 2017 and in widely circulated newspapers, presents the areas offered, the rules and procedures for participation, and the preliminary schedule of the round. Mpsa model production sharing agreement msg multistakeholder group mscf million standard cubic feet mtef medium term expenditure framework mt mega tonne nao national audit office. A comparative analysis of production sharing contracts of. Effective date means the first day of the month next following the month in which this agreement is signed by sonangol and contractor group.