"The Sakhalin II PSA - a Production 'Non-Sharing' Agreement", a comment on the NGO report
Article from: OGEL 1 (2005), in Production Sharing Contracts
The problem with the PSAs in Russia is that there are factions that believe the Foreign Oil Companies (or the Investor) are getting too good a deal. They say that the PSCs are not sustainable because the oil companies get to recover all their costs before the State receives any profit oil. This is relatively true because these Russian PSAs do not have a cost recovery limit. (About 15-20% of the worlds PSAs do not have a cost recovery limit.) So in any given accounting period in the early years of production (during the capital cost recovery phase of the contracts) the State receives as ...