What Is the Role of Overhead Cost Recovery in Production Sharing Contracts?
Article from: OGEL 4 (2006), in Production Sharing Contracts
The concept of overhead is often intuitively connected with an ill-defined charge, sometimes expressed as a proportion of some other well - defined cost, and often unaudited. Many petroleum fiscal regimes allow the contractor to recover some administrative and overhead expenses. The definition and the procedure are usually set in the accounting annex of the Production Sharing Contracts ("PSCs"). However, some PSCs avoid the term "overhead" by substituting this term for "general cost", "cost and expenses of the activities", "administrative overheads". As a result, it creates ...