Therefore, under this type of agreement, the company or consortium makes available technical know-how and capital and assumes the risk of the project in exchange for exclusive rights to explore and produce oil and/or gas from the contract territory. The host State generally owns the equipment and facilities. Unless otherwise specified in the legislation or agreement on the distribution of production, the enterprise shall also pay income tax on profits to the host State as well as all other taxes and contributions provided for by the legislation and the corresponding contract. Production sharing agreements were first used in Bolivia in the early 1950s, although their first implementation similar to today`s in Indonesia took place in the 1960s.  Today, they are often used in the Middle East and Central Asia. Buyback contracts This is a business agreement in which one party sells inventory to a second party, with the promise to buy back the inventory at a future date. Under a buyback agreement, the selling party is able to fund its portfolio without reporting the liabilities or assets on the company`s balance sheet. This type of transaction takes place between two parties. The first party “sells” its inventory to the second part, with the express promise to buy back the inventory at a predetermined price in time or at a future date. .
Based on Microsource`s solid understanding for the oil and gas industry, we are able to offer our customers specialized assistance in concluding and executing this agreement. Our services include: assessment of potential risks, evaluation of the benefits of concluding this contract, search for a partner, investor, etc. and financing, providing the basis for the conclusion of the contract with public or private companies and beyond. The three main categories of service contracts are the risky service contract, the pure service contract, and the technical support contract. Angola, Egypt, Kenya, Tanzania, Mozambique and Uganda are among the countries that follow the production-sharing agreement model, while Ghana uses the exploration and production concession contract model. Performance-based agreements, such as berantai RSC, focus more on production and recovery rates compared to production-sharing contracts favored by oil companies. The focus on optimizing production capacity in peripheral areas can be extended to contracts that govern the recovery of major oil fields in an industry whose resources are rapidly depleted.. .