Sustainable Transportation Energy Pathways (STEPS)
Ghandi, Abbas and C.-Y. Cynthia Lin Lawell (2013) Oil and Gas Service Contracts around the World: A Review. Institute of Transportation Studies, University of California, Davis, Research Report UCD-ITS-RR-13-19
This paper reviews the energy strategy and oil and natural gas fiscal systems of eight major oil or natural gas producing countries which have either adopted a variation of a service contract or have shown interest in this framework as an alternative to the traditional production sharing contract. In particular, we look at each country's variation of service contract, and examine how these variations of service contracts are different from each other. A service contract is a long-term contractual framework that is used by some host governments to acquire the international oil companies' expertise and capital without having to hand over the field and production ownership rights to them. Sovereignty concerns over the natural resources are probably the number one reason why these countries are moving towards service contracts. In our review, we also explore some of the drawbacks of service contracts including the potential for economically inefficient outcomes. In addition, we look at some possible solutions for improving the economic efficiency of service contracts.
Keywords: oil service contracts, energy strategy review, oil and natural gas producing countries