COST RECOVERY MECHANISM UNDER PSC & SERVICE CONTRACT
Strengthening cost recovery compliance, transparency, and financial governance in petroleum contracts
Course Schedule
| Date | Venue | Fees (Face-to-Face) |
|---|---|---|
| 04 – 06 Mar 2026 | Online | USD 1000 per delegate |
Course Introduction
Cost recovery mechanisms under Production Sharing Contracts (PSCs) and Service Contracts are fundamental to the financial structure of upstream oil and gas projects. A clear understanding of recoverable costs, contractual limitations, and approval processes is essential to ensure transparency, regulatory compliance, and effective cost control.
This intensive three-day online program provides participants with a comprehensive understanding of cost recovery frameworks, contractual clauses, accounting treatments, and audit practices. The course combines conceptual clarity with practical examples to help professionals manage cost recovery efficiently while minimizing disputes and compliance risks.
Course Objectives
By the end of this course, participants will be able to:
- Understand the structure and financial logic of PSCs and service contracts
- Interpret cost recovery clauses and contractual provisions
- Distinguish between recoverable and non-recoverable costs
- Apply cost allocation and cost control methodologies
- Prepare and review cost recovery statements
- Manage cost recovery audits and compliance requirements
- Reduce disputes related to cost recovery claims
Key Benefits of Attending
- Gain in-depth knowledge of PSC and service contract cost recovery systems
- Improve compliance with contractual and regulatory requirements
- Strengthen cost control and financial reporting practices
- Learn how to manage and respond to cost recovery audits
- Minimize financial disputes with partners and regulators
- Enhance professional capability in petroleum contract management
Intended Audience
This program is designed for:
- Contract and procurement professionals in the oil & gas sector
- Finance, accounting, and cost control managers
- Petroleum economists and commercial analysts
- Internal and external auditors
- Government officials and regulators overseeing PSCs
- Project managers and legal professionals involved in energy contracts
Individual Benefits
Key competencies that will be developed include:
- Clear understanding of PSC and service contract cost recovery rules
- Ability to identify eligible and non-eligible costs accurately
- Skills in cost allocation, analysis, and reporting
- Knowledge of audit procedures and compliance controls
- Improved confidence in managing contractual financial matters
Organization Benefits
Upon completing the training course, participants will demonstrate:
- Improved accuracy and transparency in cost recovery reporting
- Reduced risk of audit findings and contractual disputes
- Stronger financial governance and cost control mechanisms
- Better preparedness for regulatory reviews and audits
- Enhanced alignment between contractual terms and financial practices
Instructional Methdology
The course follows a blended learning approach combining theory with practice:
- Strategy Briefings – PSCs, service contracts, and cost recovery frameworks
- Case Studies – Real-life examples of cost recovery issues and resolutions
- Workshops – Practical exercises on cost classification and recovery calculations
- Peer Exchange – Interactive discussions on challenges and best practices
- Tools – Templates for cost recovery statements, audit checklists, and compliance reports
Course Outline
Detailed 3-Day Course Outline
Training Hours: 7:30 AM – 3:30 PM
Daily Format: 3–4 Learning Modules | Coffee breaks: 09:30 & 11:15 | Lunch break: 01:00 – 02:00
Day 1: Fundamentals of PSC & Service Contracts
Module 1: Overview of Petroleum Contracts (07:30 – 09:30)
- Structure of PSCs and service contracts
- Roles of contractors, governments, and partners
Module 2: Introduction to Cost Recovery (09:45 – 11:15)
- Purpose and mechanics of cost recovery
- Cost oil, profit oil, and service fee concepts
Module 3: Recoverable vs Non-Recoverable Costs (11:30 – 01:00)
- Eligible costs under PSCs and service contracts
- Common exclusions, caps, and limitations
Module 4: Workshop – Cost Identification (02:00 – 03:30)
- Practical exercises on cost classification
Day 2: Cost Control, Allocation & Reporting
Module 1: Cost Allocation Methodologies (07:30 – 09:30)
- Direct, indirect, and joint cost allocation
- Overhead and shared cost treatment
Module 2: Cost Control & Budgeting (09:45 – 11:15)
- Cost approval procedures
- Monitoring, variance analysis, and reporting
Module 3: Cost Recovery Statements (11:30 – 01:00)
- Preparation and documentation requirements
- Supporting schedules and records
Module 4: Workshop – Cost Recovery Calculations (02:00 – 03:30)
- Hands-on preparation of cost recovery statements
Day 3: Audit, Compliance & Dispute Resolution
Module 1: Cost Recovery Audit Process (07:30 – 09:30)
- Audit rights, scope, and timelines
- Typical audit findings and red flags
Module 2: Compliance & Regulatory Oversight (09:45 – 11:15)
- Government approvals and reporting requirements
- Managing compliance risks
Module 3: Dispute Management in Cost Recovery (11:30 – 01:00)
- Common areas of dispute
- Resolution mechanisms and best practices
Module 4: Workshop & Course Wrap-Up (02:00 – 03:30)
- Case study on cost recovery dispute resolution
- Key takeaways, peer discussion, and Q&A
Certification
Participants will receive a Certificate of Completion in Cost Recovery Mechanism under PSC & Service Contract, validating their expertise in managing, auditing, and controlling cost recovery processes under petroleum production sharing and service contracts.