Navigating Deepwater PSC Cost Recovery: Critical Lessons for Non-Operating Partners
Why standard joint operating agreement procedures frequently fail to detect cost leakage in deepwater development projects—and how non-operating partners can protect their fiscal entitlements.
In deepwater exploration and production, production sharing contracts (PSCs) establish rigorous yet complex cost-recovery mechanisms. For non-operating partners and institutional investors, ensuring that operators correctly classify recoverable expenditures is fundamental to project economics.
Key Risk Areas in Joint Venture Accounting
Discrepancies most frequently arise in shared overhead allocations, parent company technical service fees, and foreign exchange conversion timing. Independent audit reviews must combine legal contract interpretation with forensic ledger reconciliation to ensure audit exceptions are defensible.
About the Author
Rotimi Lawuyi
Lead Consultant at Finergetics Consulting Limited specializing in petroleum economics and risk governance.
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