PSC Business & Profit Sharing Funds
Background:
Production Sharing Contract (PSC) is the most widely used contractual framework in the oil and gas industry to regulate the relationship between host governments and contractors. Under this scheme, in the upstream oil & gas business Government retains ownership of natural resources, while contractors are entitled to recover costs and share profits according to agreed terms.
Understanding PSC business mechanisms—particularly cost recovery, profit sharing, and fund allocation—is critical for professionals involved in planning, operations, and decision-making. Misinterpretation of PSC clauses may lead to inefficiencies, financial disputes, and suboptimal project economics. This training provides a practical and structured understanding of PSC business fundamentals, with emphasis on profit sharing funds and their commercial implications.
Objectives:
• Understand PSC principles and contractual structure
• Explain cost recovery and profit sharing mechanisms
• Interpret PSC fiscal terms and fund allocation
• Analyze business implications of PSC clauses
• Support operational and commercial decision-making under PSC framework
Recommended Participants:
• Non-finance & non-commercial professionals
• Engineers, Supervisors, Project Managers
• Business Development, Operation, and Asset Team
• Government / Regulator liaison officers
Course Outline:
PSC Fundamentals & Business Framework
1. Introduction to Production Sharing Contract (PSC)
• History and evolution of PSC
• Comparison with concession & service contracts
• Roles of government, contractor, and regulator
2. PSC Legal & Commercial Structure
• Key PSC clauses and terminology
• Contractual rights and obligations
• Duration, work commitment, and relinquishment
3. PSC Business Flow Overview
• Revenue generation in upstream activities
• Cost elements in exploration and production
• Relationship between operations and PSC economics
4. Gross Revenue & Cost Recovery Concept
• Definition of gross revenue
• Eligible vs non-eligible costs
• Cost recovery ceiling and limitations
Profit Sharing & Fiscal Mechanism
1. Cost Recovery Mechanism in Detail
• Capital and operating expenditures (CAPEX & OPEX)
• Depreciation and amortization principles
• Audit and approval process
2. Profit Oil / Gas Sharing Mechanism
• Profit oil vs profit gas
• Government and contractor split
• Sliding scale and variable sharing
3. First Tranche Petroleum (FTP)
• Purpose and calculation
• Government and contractor FTP share
• Impact on contractor cash flow
4. Taxes, Bonuses, and Fiscal Obligations
• Income tax treatment under PSC
• Signature, discovery, and production bonuses
• Domestic Market Obligation (DMO) concept
Profit Sharing Funds & Business Implications
1. Profit Sharing Funds Allocation
• Government take vs contractor take
• Central and regional government allocation
• Special funds and earmarked revenues
2. PSC Economics & Business Decision Impact
• PSC impact on project feasibility
• Sensitivity to oil & gas price fluctuation
• Cost efficiency and profitability drivers
3. PSC Business Risk & Common Issues
• Cost overrun and recovery disputes
• Regulatory and fiscal changes
• Commercial risk from PSC interpretation
4. Case Illustration & Practical Insights
• Simplified PSC cash flow illustration
• Profit sharing calculation example
• Lessons learned from PSC implementation
Training Method
• Interactive lecture
• Conceptual explanation with examples
• Practical discussion based on real PSC structure
Expected Outcomes
• Clear understanding of PSC business logic
• Ability to read and interpret PSC profit-sharing clauses
• Improved collaboration between technical and commercial teams
About The Course Leader:
Benny Lubiantara
|Training Berikutnya: Bandung, 12-14 Oktober, 2026
PSC Business and Profit Sharing Funds | PSC business profit sharing funds | psc-business-profit-sharing-funds Pelajari skema Profit Sharing Contract (PSC) untuk mendukung manajemen pendapatan di industri minyak dan gas. | Learn about Profit Sharing Contract (PSC) schemes to support revenue management in the oil and gas industry. | Dr. A. Rinto Pudyantoro* MM* Ak* CA | Oil & Gas* Management* Finance