Part 19

Disposal of Production

Recall that under a production sharing contract, costs are deducted from the value of production to arrive at profit oil to be shared between the contractor and the Government of Guyana in the proportion set out in the contract: Article 11.6. The contractor is also permitted to use as much production as needed in the operations and within the transportation and terminal system.

If the reader thinks that the system is becoming complicated and therefore subject to dispute, it gets even trickier since there may also be some third party usage of the transportation terminal systems. Where there is such third party usage, the quantities so used or lost outside of the contract area is proportionate to the aggregate use of the that system and the value is excluded from any calculations under Article 11.

Minister’s share

The quantity of production to which the Minister is entitled is measured and delivered to the Minister at the delivery point, defined as the free on board point of export either onshore or offshore as agreed by the Minister and the contractor. Article 11.6 referred to above, is subject to Article 14 which provides that each party has the right to take its share of the profit oil at the delivery point and to separately dispose of its share of the total quantities of production under the Agreement.

The Agreement provides that within twelve months of the approval of a development plan or such later date, but no later than three months before the lifting of the first scheduled lifting of crude oil, the contractor may propose to the Minister off-take procedures governing