Optimizing Production Sharing Contract For Marginal Fields Development

This study proposes an optimized production sharing contract that promote the development of marginal fields by protecting the contractor’s downside while enabling the government to increase its rightful share in case of profitability increment.
A marginal field model is developed based on pseudo field that was assumed in reference to commonly accepted exploration and development data that are typical in Nigeria. The economic analysis of this model involves cash flow modeling, profitability analysis, and sensitivity analysis.
The parameters of the PSC are varied to analyze the effect of each provision, and to identify which combination of variables will ensure a fair division of benefits and risks between the government and the contractor.