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Euromoney Learning Solutions

Petroleum Fiscal Regimes

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Attend this practical and interactive three-day training course and enhance your knowledge in the following key areas:

  • The history and evolution of production sharing contracts (PSC’s)
  • The PSC flowchart, content and format
  • Cost recovery
  • Profit sharing
  • Bonuses
  • Sliding scale fiscal mechanisms
  • Taxation
  • Ring fences
  • The economics of PSC’s

Plus: Production Sharing Contract Fiscal Modelling Workshop

This course explores the structure and mechanisms of production sharing contracts (PSC’s) for upstream oil and gas projects. Studying the underlying processes and commercial drivers, participants will examine case studies to illustrate the economic structure of these complex agreements. The PSC Economic course brings the theory to life, allowing course attendees to build and interpret their own PSC model based on a real life example

Course Objectives

  • Learn about the history, evolution & structure of PSC’s
  • Investigate cost recovery & profit sharing
  • Examine fiscal mechanisms & ring fence calculations
  • Identify taxation liability & allowances
  • Construct a production sharing contract spreadsheet model
  • Interpret model outputs to enhance investment decision making

All our courses are available in-house.


Day 1

An introduction to production sharing contracts and upstream economic analysis

  • The history and evolution of production sharing contracts (PSC’s)
  • The basic PSC, contractor and government relationship
  • The PSC flowchart, content and format

The fundamentals of upstream economic analysis

  • Discounted cashflow
  • Discount rate, discount factor and discount method
  • The cost of capital and the hurdle discount rate
  • Capital budgeting techniques (NPV, IRR, DPIR, payback)
  • Valuing an asset, making development & investment decisions
  • Inflation, cost escalation, real versus nominal cash flows
  • Managing risk

Cost recovery

  • Cost recovery mechanism
  • Recoverable costs
  • Cost oil, cost gas and NGL’s
  • Excess cost recovery
  • Cost recovery calculation and examples

Case studies

Profit sharing

  • The profit pool
  • Profit sharing
  • Profit gas and profit oil
  • Profit sharing calculation and examples

Case studies

Day 2


  • Signature & commerciality
  • Production
  • Cost recoverability
  • Bonus calculation and examples

Case studies

Sliding scale fiscal mechanisms

  • Production rate
  • Production volume
  • R-Factor
  • Step versus incremental methods
  • Sliding scale calculations and examples

Case studies


  • The basis of the taxation liability
  • The CT ring fence
  • Chargeable income
  • Capital allowances
  • Other allowances
  • CT rates, losses and abandonment costs
  • Liability and payment phasing
  • Taxation calculations and examples

Case studies

Ring fences

  • PSC ring fence
  • Taxation ring fence
  • Ring fence calculations and examples

Case studies

The economics of PSC’s

  • Contractor cash flow
  • Government cash flow
  • Comparison with royal and taxation systems

Case studies

Day 3

Production Sharing Contract Fiscal Modelling Workshop

  • A PSC based case study modelling the fiscal terms in Microsoft Excel(TM)
  • Understanding the PSC fiscal structure and algorithms
  • Determining the field, economic and fiscal data and building the input decks
  • Step by step construction of the PSC model
  • Running the economic cases and evaluating the results
  • Analysis of the sensitivities
  • Electronic copy of model solution provided to delegates

Summary and closing remarks

Who should attend

  • Production sharing partners
  • Economists working in the industry
  • Business development managers
  • Lawyers involved in the industry
  • Analysts working in the industry
  • Auditors working in the industry


With over 20 years' hands-on experience as a Petroleum Economist in the upstream oil and gas industry, Peter has a detailed understanding of the technical and financial aspects of the industry as well as the key determinants of project value and risk. He leverages his in-depth experience of numer...


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