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Upstream Petroleum Contracts, Accounting & Auditing Policies and Procedures

Dates Venues Register
01/03/2026 - 05/03/2026 LONDON

Introduction

Upstream Petroleum Contracts, Accounting & Auditing Policies and Procedures

Objectives

At the end of this training course, you will learn to:

  • Gain a full understanding of the different types of the Upstream Petroleum Contracts
  • Understand the main contractual terms and their differences between the various types of contracts from PSA, Service contracts and others
  • Be aware of the approaches to negotiation of these contracts
  • Incorporate the best terms into these Upstream Petroleum Contracts
  • Develop an understanding of the accounting and auditing standards, policies and practices used by Upstream Petroleum companies
  • Improve relevance and reliability of financial reports to better meet the needs of users
  • Review and use publicly available information for benchmarking the business performance
  • Understand the role and function of an Internal Audit Department
  • Understand audit risk and efficiently plan, control and record an audit assignment

WHO SHOULD ATTEND?

This GLOMACS training course is appropriate to a wide range of professionals but will greatly benefit:

  • Senior Contract Negotiators and Managers
  • Legal Managers and Legal Counsel
  • Commercial and Business Managers
  • Contracts Administrators and Managers
  • Commercial, Financial and Insurance Professionals
  • Project and General Management Personnel
  • Corporate Accountants, Financial Controllers, Treasury Officers, Management Accountants
  • Finance Staff in General Accounting, Payables, Receivables, Inventory, Fixed Assets, etc.
  • Joint Venture Accountants and Auditors
  • External, Financial and Internal Auditors
  • Government Regulators and Auditors
  • Financial and Investment Analysts
 
 Course Outline
Module 1: Upstream Petroleum Contracts

DAY 1

Introduction and Overview of Upstream Petroleum Contracts

  • Brief Overview of the O&G Industry
  • Oil and Gas Terminology
  • The Legal Framework to Upstream Contracts
  • Introduction to Contract Formation
  • Key Oil and Gas Terminology
  • Oil and Gas Industry Structure
  • Relationship between Different Players in the Oil and Gas Industry
  • Phases of the Oil and Gas Industry
  • Oil and Gas Contract Fundamentals and Legal Principles
  • Territorial Water, Continental Shelf and United Nations Convention on the Law of the Sea (UNCLOS)

DAY 2

Contracting in The Upstream Sector: Ownership and Licensing

  • Ownership and Exploitation of Reserves
    • The ABCs of Petroleum Contracts: License-Concession Agreements, Joint Ventures, and Production-sharing Agreements
    • Characteristics of Upstream Contracts
    • Commercial Realities of the Oil and Gas Business
    • Agreement with Resource Holders
    • Ownership of Oil and Gas
    • Risk Service Contracts (RSCs)
    • Grant of Rights by Resource Holder
  • Host Country's Legal and Regulatory Framework and Fiscal Regime - Stabilization
    • Role of Host Government
    • Key Issues in International Oil and Gas Contracts
    • Negotiation Framework and Strategy - Objectives of Host Countries / NOCs and IOCs
  • Host Government‘s Role in Upstream (Exploration & Production (E&P)) Agreements
    • Overview of Upstream Operations and E&P Agreements (types and trends by region)
    • Key Differences between Production Sharing Contracts (PSCs), Concessions, Service Contracts and JV Contracts
    • Role of Host Government in Upstream Contracts

DAY 3

Production Sharing Contracts (PSC) & Joint Operating Agreements (JOA)

  • Commercial Terms in Licensing and Concession Agreements
    • Fiscal Arrangements, License Fees
    • Five Key Financial Aspects to a PSC:
      1. Royalty, The R factor
      2. Cost Oil
      3. Profit Oil
      4. Taxation
      5. Bonuses, Penalties
    • PSC – Cash Flow Distribution
    • PSC – CF Distribution Example – Year N+1
    • Comparison of Fiscal Systems
  • Joint Operating Agreements (JOAs)
    • What is a Joint Operating Agreement (JOA)?
    • Nature, Aim and Functions of a Joint Venture
    • Government Approval
    • Key Areas of the JOA
    • Purpose and Scope: Participating Interests

DAY 4

Service Contracts, Farm-In and Farm-Out and Unitization - Risk Bearing and Non- Risk Bearing Service Contracts

  • Participation Agreements (Farm-in and Farm-out)
    • Agreements for Farm-ins and Farm-outs
    • Nature of the Farm-out
    • Subject Matter of the Farm-out
    • Interest Assigned and Reserved
    • Assignment of Interest
  • Unitization and Unit Operating Agreements (UUOAs)
    • What is unitization?
    • Unitization in Practice
    • Government Approval
    • Transboundary Unitization

DAY 5

Negotiating Production Sharing Contracts

  • Government Take
  • Production Share and Cost Recovery
  • Local Content
  • Force Majeure
  • Dispute Resolution
  • Stabilization and Renegotiation Provisions

Negotiation Simulation Exercise

  • Negotiation a PSA with a Government Entity
  • Objective: The objective is to establish what can be achieved in the meeting, what preparation is needed for it and what strategy should be adopted and then to pursue this strategy
  • Feedback Session

Negotiation of Oil and Gas Disputes

  • Importance of Negotiation in Oil and Gas Business
  • Disadvantages of Competitive or Positional Negotiation
  • Principled Negotiation between the Parties to Achieve Best Results
Module 2: Upstream Petroleum Accounting

DAY 6

Major Accounting & Auditing Issues in the Upstream Petroleum Sector

  • The Latest Accounting & Auditing Issues Facing the Sector
  • The Impact of Commodity Prices, Currency & Interest Rate Fluctuations and Political and Environmental Developments
  • The Impact of Financial and Accounting Issues on Strategic Development and Growth within the Sector
  • The Annual Reports & Financial Statements of Leading International Petroleum Companies
  • An Overview of IFRS in Relation to Upstream Oil & Gas Accounting
  • The Role of Auditing

DAY 7

Accounting for Revenue & Costs in the Upstream Petroleum Sector 

  • Revenue Recognition & IFRS 15: Revenue from Contracts with Customers
  • Costs in Acquisition, Exploration, Development and Production
  • IFRS 6: Exploration for and Evaluation of Mineral Assets
  • Accounting Approaches - The "Successful Efforts" (SE) Method or the "Full Cost" (FC) Method
  • Break Even Oil, Cost Oil & Profit Oil
  • Evaluating Profitability of Leading International Oil & Gas Companies

DAY 8

Accounting for Assets in the Upstream Petroleum Sector 

  • Reserves & Resources
  • IAS 16: Property, Plant and Equipment
  • Depletion, Depreciation & Amortisation (“DD&A”)
  • IAS 36: Impairment of Assets
  • IAS 37 – 39 : Provisions, Contingent Liabilities and Contingent Assets; Intangible Assets and Financial Instruments
  • Evaluating the Assets & Reserves of Leading International Petroleum Companies

DAY 9

Creative Accounting, Corporate Governance & Auditing

  • Creative Accounting
  • Corporate Governance
  • Published Financial Statements
  • The Role of the Board & Audit Committee
  • External Auditing - Reporting to investors in the Oil & Gas industry
  • Internal Auditing - Defining and Developing the Internal Audit Process

DAY 10

The Internal Audit Function

  • Establishing the Roles & Staff within the Internal Audit Department
  • The Various Types of Audits
  • Planning & Commencing Internal Audit Examinations
  • Controls & Substantive Tests
  • Communicating Audit Findings
  • The Audit Exit Conference Meeting & Post-Audit Reviews

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