The Prevalence of Production Sharing Contracts in Oil and Gas

Abstract IntroductionBackgroundThe nature of the environment in which a business operates determines how it engages other players in the sector. This, therefore, determines the types of contracts that businesses get into. The oil and gas industry relies on contracts to carry out its activities just like other business entities do. The oil and gas industry mainly engages production sharing contracts, driven by the numerous stakeholder interests the sector has.Research TopicThe Prevalence of Production Sharing Contracts in Oil and Gas (Case Study of Sonangol, an Angolan Oil Company)AimThe aim of the study is to establish the prevalence of production sharing contracts in the oil and gas industry, with particular interest in Sonangol, an oil company in Angola.ObjectivesThe objectives of the study are: To determine the nature of the oil and gas business in Africa To determine the types of contracts administered in the oil and gas sector To determine the share of production sharing contracts relative to other types of contracts To establish the reasons for adoption of production sharing contracts at SonangolResearch questionsWhat types of contracts does Sonangol engage Are production sharing contracts prevalent at Sonangol Why does Sonangol adopt production sharing contracts What benefits and challenges do Sonangol get by using production sharing contracts Literature ReviewKey WordsContracts, Production Sharing Contracts, Effects, Prevalence, Economics, International Oil Companies, National Oil Companies, AngolaKey LiteratureBindemann, K., 1999. Production Sharing Agreements: An Economic Analysis This source touches on the economics of production sharing agreements with reference to oil and gas in Angola and the Middle East. Bindemann, K. 2000. The Response of Oil Contracts to Extreme Price Movements. Discussion Paper. Department of Economics (University of Oxford). Fattouh, B. and Darbouche, H., 2010. North African oil and foreign investment in changing market conditions. Energy Policy, 38(2), pp.119-1129.Gaps in literatureMost literature refers to situations in North Africa and the Middle East and not Angola or Sonangol. Most available literature is more than five years old. Chances are that the conditions have changed, rendering them irrelevant to current circumstances This section presents an analysis of existing literature on Oil and Gas in Africa and Angola in particular, while studying the types of contracts that oil and gas companies utilize. This is broken down into subtopics as follows:Oil and gas in AfricaThis section provides a general overview of the oil and gas industry, highlighting the major players: companies, countries, communities, and other stakeholders. History of the oil and gas industry in Africa Challenges in the African oil and gas industryOil and gas in AngolaThis section provides an overview of the Angolan oil and gas industry, highlighting the major players: companies, communities, and other stakeholders. History of the oil and gas industry in Angola Challenges in the Angolan oil and gas industry Merits of oil and gas to the Angolan EconomyContracting in the oil and gas industryTypes of contracts administered in the global oil and gas industry Comparison between contracting in Africa and the Middle EastProduction Sharing Co ntractsIdentify the parties involved Terms and conditions Benefits/demeritsContracting at Sonangol (Types of contracts)Encompasses all types of contractual agreements Sonangol engages Criteria Sonangol uses to select the type of contractual agreements it uses Ratio of contracts based on typeProduction sharing contracts at SonangolThe nature of production sharing contracts at Sonangol Parties involved Responsibility Terms and conditions Research Methodology The study will follow the constructivist approach and rely on the analysis of secondary data that will be obtained both from the private and public domain. Of particular interest will be records from Sonangol and researches published in journals. The research will use catalogues to locate relevant books and indexes to locate appropriate periodicals. In addition, the study will use the Internet to find relevant electronic resources and databases. An analysis of the books, periodicals, and databases would follow to ascertain the authority and quality of information. Data analysis will be quantitative. Findings i.Reasons for the adoption of production sharing contracts at Sonangolii.Advantages of production sharing contracts at Sonangol iii.Disadvantages of production sharing contracts at Sonangol iv.Comparison between production sharing contracts and other types of contracts at SonangolDiscussion Discuss the reasons for the prevalence of production sharing contracts at Sonangol, their merits, demerits, and challenges. Conclusion Summary of the suitability of production sharing contracts at Sonangol. Are they the best for the oil and gas industryShould they be upheld? References List of all works cited in the study Appendices Relevant documents, tables, and graphs