Oil contracts between financial returns and benefits companies

2/3/2016 0:00

BAGHDAD - Imad Emirate

Economist: that the legal framework for the management of development and production and national use and export of oil and gas operations was not still the subject of bitter debate between the central government and Kurdish Under the constitution, the oil and gas belongs to all the people in all the regions and provinces he said.

He said economic expert Dr. Ahmed Abrihi Ali "morning": do not agree on a procedural definition of the content of this speech, I have used the Federal Ministry of Oil Technical Service and the Kurdistan Regional Government Contracts involved in the production of oil and gas development, and the need here to the comparative analysis of contracts, to take into account all the factors affecting the rate of internal rate of return in addition to the element of risk.

Internal Rate of Return variation

He explained in the case of an equality of risk and the pattern time to spend and recover the money, the disparity in the internal rate of return per barrel product, of cabs broken barrel in technical service contracts, either in the production sharing contract depends on the price of oil, because the company's dividend knows percentage of profit oil, and in the cases bear oil resource burden of investment and expenditures by companies for this serves as a loan Tstrdh of early revenue, offset what is received by the time the difference in value between payments and receipts in addition to the price of the experience, and the Kurdistan Regional Government held about 50 contracts, which are often participate in the production of patches exploratory, which include contracts the risk of not finding commercial reserves after incurring exploration expenditures.

He d. Abrihi with it decreases the probability of failure in the entire spatial scale of the work of the contractor, and check when the discovery of those contracts be consistent with companies far ahead of the Federal Authority for decades.

And awarded the provincial government service fields Khurmur and Chamchamal gas, concentrated differences between the federal government and the province in the national strategy for the development of the oil sector, as well as the terms of the contract and to the products of the obligations on the oil recovery is different from what it is in the Southern Oil, the time value of money is an important pillar of the oil investment.

And that the difference between the current value of each of the amounts spent and imported depends on the times of spending and the recovery, despite equal nominal values, and the more extended investment spending and recovery for the longest time increased the difference between the current Alakiem the amounts spent And he recovered.

Invested Capital

He Abrihi that companies are dealing with the current value of a difference as a capital investor, or by virtue of the investor money, so it uses the internal rate of return in the service and production-sharing contracts, as in the normal investment projects, and because participation in the production held by the Kurdistan Regional Government also whereby recover investment expenditure decades, there is a similarity between the two types of contracts in the temporal pattern of flows steadily impact of other factors in the delay times of the recovery, and so we can say that a specimen simplified analysis accommodate both types of contracts on the basis of the internal rate of return and the trade-off, the financial difference between service contracts and participation is that the company's return on a barrel in the second mode of the contracts varies depending on the price because the company's profit and share it also Sitagaran accordingly.

Production contracts

Among Abrihi under the manufacture of gas with Shell and Mitsubishi holding do not recover capital expenditures, so it is holding an ordinary capitalist partnership, there are other partial that the income tax is 35 percent on production sharing and service contracts in the licensing rounds and the South Gas Company for decades.

These involve a lack of consistency in its application, because revenue service is the profit in the strict sense of the word which is exactly the meaning of income in terms of tax accounting and to participate in production of Kurdistan contracts intended to impose on annual cash flow of the company from the profit oil, also a net income definition is intended normally Laws income tax, either in the case of Mitsubishi partnership, it imposes on the net annual flow is different from operational profit.