COST RECOVERY MECHANISM UNDER PSC & SERVICE CONTRACT
“Optimizing Cost Recovery and Financial Management in Production Sharing and Service Contracts”
Course Schedule
| Date | Online | Online |
| 04 -06 Mar 2025 | Online (Live) | USD 1500 per delegate |
Course Introduction
In the oil and gas industry, the ability to manage and recover costs effectively under production-sharing contracts (PSCs) and service contracts is crucial for financial success and regulatory compliance. These contracts often involve complex cost allocation and recovery mechanisms, requiring a clear understanding of financial structures, tax implications, and performance milestones.
This 3-day online course provides a comprehensive understanding of the cost recovery mechanisms within PSCs and service contracts. Participants will gain knowledge on how to calculate, manage, and optimize cost recovery, while ensuring compliance with legal and contractual terms. The course also covers practical applications for managing joint venture costs, risk, and financial reporting.
Course Objectives
By the end of this course, participants will be able to:
- Understand the financial structure and principles of PSC and service contracts
- Identify eligible costs and recoverable expenses under these contracts
- Apply cost recovery mechanisms effectively in joint venture environments
- Ensure compliance with regulatory requirements and tax implications
- Develop strategies for optimizing cost recovery and financial performance
- Prepare and report cost recovery documentation accurately for audits and reviews
Key Benefits of Attending
- Master the financial intricacies of PSC and service contract cost recovery
- Learn to manage complex joint venture cost allocation and reporting
- Gain the skills to optimize cost recovery and reduce financial risks
- Understand the legal and regulatory landscape surrounding cost recovery
- Improve your ability to work with auditors, tax authorities, and partners in joint ventures
Intended Audience
This program is designed for:
- Finance and accounting professionals in the oil and gas industry
- Contract managers and administrators
- Procurement professionals working with PSCs and service contracts
- Legal advisors handling oil and gas agreements
- Project managers and engineers in joint ventures or service contracts
- Professionals seeking to enhance their knowledge of oil and gas financial management
Individual Benefits
Key competencies that will be developed include:
- In-depth understanding of PSC and service contract terms and conditions
- Ability to calculate and track recoverable costs and expenses
- Managing joint venture cost allocation and financial reporting
- Developing cost recovery optimization strategies
- Familiarity with regulatory compliance and auditing processes
Organization Benefits
Upon completing the training course, participants will demonstrate:
- Improved financial management and cost recovery processes in projects
- Better coordination with legal, tax, and financial departments
- Enhanced ability to manage and resolve cost recovery disputes
- Reduced risk of non-compliance and financial mismanagement
- Streamlined financial reporting and auditing processes
Instructional Methdology
- Workshops – Developing cost recovery strategies, financial forecasting, and contract negotiation
- Peer Exchange – Sharing of industry experiences and best practices
- Tools – Cost recovery templates, financial modeling tools, and reporting checklists
Course Outline
Detailed 3-Day Course Outline
Delivery Format: Online (Live) | Platform: Zoom, WebEx or Microsoft Teams
Day 1 – Introduction to PSC & Service Contracts and Cost Recovery Principles
Module 1: Overview of Production Sharing Contracts (PSCs)
- What is a PSC and how does it work?
- Key elements of PSCs: ownership, production, and profit sharing
- The relationship between the government and contractor
Module 2: Understanding Service Contracts
- Defining service contracts in the oil and gas sector
- Key differences between PSCs and service contracts
- How service contracts affect cost recovery and profitability
Module 3: Cost Recovery Principles
- What constitutes recoverable costs?
- Eligible cost categories: capital and operational expenses
- Cost recovery caps and limitations under PSCs and service contracts
Module 4: Workshop – Reviewing Sample PSC and Service Contract Clauses
- Participants will analyze real-world PSC clauses regarding cost recovery
Day 2 – Managing and Reporting Cost Recovery
Module 5: Cost Allocation in Joint Ventures
- How to allocate costs between joint venture partners
- Joint venture accounting principles and methodologies
- Managing costs in multi-party projects
Module 6: Regulatory and Tax Compliance in Cost Recovery
- Compliance with national and international tax regimes
- Managing tax incentives, deductions, and credits
- Auditing cost recovery and reporting to regulators
Module 7: Financial Reporting and Documentation
- Preparing accurate cost recovery reports for audits
- Developing cost recovery spreadsheets and financial documentation
- Best practices for reporting cost recovery progress to stakeholders
Module 8: Workshop – Creating a Cost Recovery Report
- Participants will create a sample cost recovery report based on a real PSC
Day 3 – Optimizing Cost Recovery and Dispute Resolution
Module 9: Optimizing Cost Recovery and Financial Performance
- Cost optimization strategies in PSC and service contracts
- Identifying and managing cost overruns
- Leveraging financial tools for better forecasting and budget management
Module 10: Dispute Resolution in Cost Recovery
- Common causes of disputes in cost recovery
- Mechanisms for resolving disputes between JV partners and contractors
- Case study: resolving a cost recovery dispute
Module 11: Strategies for Successful Cost Recovery Management
- How to streamline cost recovery processes and reduce delays
- Improving transparency and communication with stakeholders
- Legal considerations in cost recovery management
Module 12: Final Workshop – Developing a Cost Recovery Strategy for a PSC
- Participants will develop and present a comprehensive cost recovery strategy
- Group feedback and discussion
Certification
Participants will receive a Certificate of Completion in Cost Recovery Mechanism under PSC & Service Contract, validating their ability to manage, report, and optimize cost recovery within joint ventures and service contracts in the oil and gas industry.