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Contractual Systems in the Oil and Gas Sector: Current Status and Development

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  • Fatima Dirani

    (Faculty of Economics, Saint-Petersburg Mining University, 21st Line V. O., 2, 199106 Saint Petersburg, Russia)

  • Tatiana Ponomarenko

    (Faculty of Economics, Saint-Petersburg Mining University, 21st Line V. O., 2, 199106 Saint Petersburg, Russia)

Abstract

Production activities in the oil and gas industry are capital-intensive and associated with high technology, with these assets not always being available to oil-producing countries or national companies. Any form of interaction between the parties involved in natural resource extraction requires clear regulation regarding contractual relationships. This study attempts to analyze Indonesia’s production sharing contract system in order to assess its applicability to other conditions. The article covers the key aspects of contract theory, provides a classification of contractual systems in the oil and gas sector, and discusses the most common types of contractual agreements. It also considers the key principles of production sharing contracts (PSCs), analyzes the development of PSC practices in Indonesia over the past sixty years, and highlights PSC advantages and disadvantages.

Suggested Citation

  • Fatima Dirani & Tatiana Ponomarenko, 2021. "Contractual Systems in the Oil and Gas Sector: Current Status and Development," Energies, MDPI, vol. 14(17), pages 1-14, September.
    • Handle: RePEc:gam:jeners:v:14:y:2021:i:17:p:5497-:d:628456
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    References listed on IDEAS

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    1. World Bank, 2000. "Indonesia : Oil and Gas Sector Study," World Bank Publications - Reports 15255, The World Bank Group.
    2. Jensen, Michael C. & Meckling, William H., 1976. "Theory of the firm: Managerial behavior, agency costs and ownership structure," Journal of Financial Economics, Elsevier, vol. 3(4), pages 305-360, October.
    3. Irina Filatova & Liubov Nikolaichuk & Dokka Zakaev & Igor Ilin, 2021. "Public-Private Partnership as a Tool of Sustainable Development in the Oil-Refining Sector: Russian Case," Sustainability, MDPI, vol. 13(9), pages 1-23, May.
    4. Williamson, Oliver E, 1996. "Revisiting Legal Realism: The Law, Economics, and Organization Perspective," Industrial and Corporate Change, Oxford University Press and the Associazione ICC, vol. 5(2), pages 383-420.
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    Cited by:

    1. Saad Balhasan & Mohammed Alnahhal & Shahrul Shawan & Bashir Salah & Waqas Saleem & Mosab I. Tabash, 2022. "Optimization of Exploration and Production Sharing Agreements Using the Maxi-Min and Nash Solutions," Energies, MDPI, vol. 15(23), pages 1-19, November.
    2. Tatyana Semenova & Ali Al-Dirawi, 2022. "Economic Development of the Iraqi Gas Sector in Conjunction with the Oil Industry," Energies, MDPI, vol. 15(7), pages 1-31, March.
    3. Saad Balhasan & Mohammed Alnahhal & Brian Towler & Bashir Salah & Mohammed Ruzayqat & Mosab I. Tabash, 2022. "Robust Exploration and Production Sharing Agreements Using the Taguchi Method," Energies, MDPI, vol. 15(15), pages 1-19, July.

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