AFC-102 PRODUCTION SHARING CONTRACT (PSC) ACCOUNTING AND REPORTING

The fiscal relationship between the government and the contracting company is specified in a production sharing contract (PSC). With respect to the right to pursue a petroleum production project in a country, a contracting company typically agrees to pay the government a royalty on production. This royalty payment is computed on gross production volume or revenue before any costs are deducted. In return, the contracting company is entitled to recover the costs it incurs on the venture. The amounts the company can recover during any accounting period for various types of costs are stated as a percentage of either total production or production after deduction of the government’s royalty. This course provides an overview of PSC accounting and reporting requirements for government royalty and contracting company cost recovery of petroleum exploration, development and production projects. 

 

Topics:

1. Accounting principles and practices in upstream oil & gas industry

2. PSC accounting

3. Other PSC Considerations (First Tranche Petroleum, Domestic Market Obligation, Investment Credit, Cost Recovery) 

4. PSC Accounting vs. US GAAP vs. IFRS (International Financial Reporting Systems)

5. Recording of PSC Accounting, US GAAP and IFRS for operator and non-operator