The overview of the legal and institutional framework for. 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. The addendum establishes some changes to a production sharing. Tanzanias model psa serves as the basic document for negotiations between foreign oil companies, the. New production sharing agreement for tanzania ashurst. Crucially, whether the state opts for the licence and tax model or the psa model, the risk that. Tanzania oil and gas 4th licensing round and 20 model production sharing agreement.
Through pscs, our partner bear exploration, development and production costs in return for an agreed share of production. A comparative analysis of production sharing contracts of. Managing natural resources for sustainable growth and human develop ment in t anzania the case of extractive industry by dr. 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. The tanzanian government through the ministry of women, children and community development is. The model behind the songo songo gas project was highly complex.
Boma masters in international and comparative lawtranscultural business faculty of law, university of lapland autumn, 20. Tanzania introduces new model production sharing agreement and mozambique prepares to. Model psc 4 february 2007 article 1 scope and definitions 1. The politics of gas contract negotiations in tanzania. 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. Royalty, therefore, becomes a part of total net revenue of the state from the 1 according to the federal law no. 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. 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. Government participation and local content the government can participate through the national oil company. Mpsa model production sharing agreement mem ministry of energy and minerals mof ministry of finance. The contractual form changes between and within countries but the most common contracts are concession contracts and production sharing agree.
Effective date means the first day of the month next following the month in which this agreement is signed by sonangol and contractor group. One of the main purposes of the production sharing contract system is to exert state control over the. Tanzanias new regime on oil and gas laws breakthrough. In fact, it took the efforts of some really brave anticorruption advocates to leak the contract to the parliament of tanzania in 2014.
Part i scope and interpretation 1 scope this contract is a production sharing contract, in accordance. 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. For this licensing round, the got has published a new 20 model production sharing agreement the mpsa. 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. Openoil has created similar almanacs for other countries across the. Production sharing agreements versus concession contracts. An empirical analysis 5 production sharing agreements 1966b98 5. Key terms contained in the mpsa 20 are summarised below 1. This production sharing agreement the agreement is made on. Due diligence on possible acquisition of a hydropowergenerating company in tanzania. Tanzania oil and gas 4th licensing round and 20 model. How to scrutinise a production sharing agreement a guide or the oi and gas sector ased on eerience rom the asian egion 2012. Leaked agreement shows tanzania may not get a good deal.
State, on behalf of the people of tanzania, and tpdc contracts a private oil and. Procedurally in most jurisdictions these consents come in one of two forms. We note that both the current act and model product sharing agreement hereinafter psa are into question regarding the indigenous legal right of ownership. 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. 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. Production sharing agreements vs service contracts from the view of an ioc.
Tanzania, or to which the united republic of tanzania is entitled under international. Tanzanias new regime on oil and gas laws legal analysis by. May 20, 2014 abstract governments choose among many contracts to delegate the exploration and the extraction of oil. By then, oil prices were low and almost all exploration companies had left tanzania. Aug 10, 2015 tanzanias new regime on oil and gas laws. Agreement or the agreement means this production sharing agreement executed among the government, tpdc and abc, including its annexes. Managing natural resources for sustainable growth and. In many ways the 1989 mpsa represents a move towards a more. The somalian government, financed by the african development bank afdb, in the drafting of the model production sharing agreement and a negotiation matrix.
If production reaches 1,000 million cubic feet per day. Modeling chinas offshore production sharing contracts. 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. Development licenses require the transfer of management and operation functions to tanzanian. Tanzanian citizens and suppliers to participate in the petroleum sector. Readers should take legal advice before applying it to specific issues or transactions. This mpsa replaces the earlier 2008 model production sharing agreement. Exploration opportunities production sharing contract overview. Local content the added value brought to the hydrocarbon resources of the united republic of tanzania through the participation and use of national. The early concession system gave the host government no say in the exploration and production program. How to effectively answer law essay questions latest law. Tanzania enacts legislation impacting the oil and gas ey. Production sharing agreements vs service contracts from.
Apr 16, 20 production sharing agreements vs service contracts from the view of an ioc. Tanzania paid dearly for nondisclosure of oil contract. Nigeria, indonesia, malaysia and equatorial guinea. One of the essential tools for management of the sectors including the oil and gas sector is the legislative and institutional structure. Pura will develop and submit to the minister a model of production sharing agreement or any other model agreement to be approved by cabinet. Governments sometimes use model contracts to guide the formation of actual psas with companies. Tanzania enacts legislation impacting the oil and gas industry executive summary. 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. Leaked agreement shows tanzania may not get a good deal for gas by ben taylor. 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. 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. Protase ishengoma dla piper africa in tanzania immma. Psas are entered into with tanzania petroleum development. In 1989, a model production sharing agreement mpsa was introduced to guide the negotiations with private companies killagane, undated a.
Components of production sharing contract in kenya oilnewskenya. Pdf an overview of the oil and natural gas revenue. Mpsa model production sharing agreement ndp national development plans ngos non governmental organizations. Tanzanias new regime on oil and gas laws legal analysis by breakthrough attorneys.
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. The sharing in production sharing contracts extends beyond oil and gas. Training provisions dedicated to government and tanzanian petroleum and development corporation tpdc personnel at the exploration license level. While making good progress in developing its tanzanian projects, the company is actively seeking to expand its operations beyond tanzania. Whereas the model production sharing agreement from 1989 had operated with up to 50%. 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.
Production sharing agreements mpsas, which have guided. Key terms contained in the mpsa 20 are summarised below1. Tanzanias new regime on oil and gas laws legal analysis. Review of public policies, legislation and regulations pertaining to the. Production sharing agreements psas in the first instance, but nonetheless will. 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. Production sharing agreements psa are among the most common. The acquisition marks ottos entry into the exciting east african rift valley, which is historically underexplored but widely accredited as having significant exploration potential. 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.
Production and costs of a unitized field to be allocfield to be. 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. Royalty is allocated before production sharing is calculated. Application for production sharing agreement to allow horizontal wells to cross lease lines page 1 as of oct 5, 2018. 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. Pura is to develop a model production sharing agreement psa to be approved by the cabinet. Taxation the contractor shall be subject to tanzanian taxes. Tanzania is entitled under international law, including petroleum underlying the area described in annex a hereof, is vested entirely and. Production sharing agreements mpsas, which have guided the. Production sharing agreements vs service contracts from the.
License holders and contractors shall every year prepare a joint. Tzs tanzanian shilling unep united nations environmental programme usd united states dollar vat value added tax wcf workers compensation fund. Snjdz production sharing contract psc, the tanzanian pscror hybrid. A variety of psc terms are designed to encourage an optimal level of investment based on the complexity of petroleum resources. When it involves the period of gas sales agreement which is. Model production sharing contract under the petroleum act. To view this article you need a pdf viewer such as adobe. It was even speculated that there were even highly controversial amendments to the agreement. Update tanzania bill establishing the petroleum act 2015. The purpose of this paper is to model chinas offshore production sharing contracts using a probabilistic approach.
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. Agreement or the agreement means this production sharing agreement executed between sonangol and contractor group, including its annexes. 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. Production sharing agreements versus concession contracts julie ing. 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. The fundamental distinction between psc and rt regimes lies in the. Review of public policies, legislation and regulations. 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.
Suggestions for a better framework to benefit the country. A comparative analysis of production sharing contracts of selected developing countries. This addendum shall form part of the production sharing agreement between the government of the united republic of tanzania. An application of the principalagent model appendix 4. Tender protocol and model of the production sharing agreement. Jul, 2015 licensing of petroleum exploration blocks, is governed by the petroleum exploration and production act chapter 308 of the laws of kenya.
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