Sharing Contract Research Articles

Effects of government’s policy on supply chain coordination with a periodic review inventory system to reduce greenhouse gas emissions

In many countries, the governments and statesmen set various regulations to reduce Greenhouse Gas (GHG) emissions and entities must also comply with these rules to maintain their profitability. This paper aimed to reduce GHG emissions in the two-echelon Supply Chain (SC) with one supplier and one retailer under the government’s policies. Emissions from the intended SC are results of using trucks to deliver orders from the supplier to the retailer to replenish his/her inventory. Furthermore, the demand of market is stochastic and a periodic review inventory system is used by the retailer in which, the supplier determines the visit interval. Since the retailer has direct interaction with the end customer, he/she should select the best SC service level. In this regard, because the supplier as a leader has full authority for the retailer’s inventory replenishment and he/she leads to GHG emissions in the SC, the government is trying to control environmental pollution by applying the subsidy and penalty to the supplier. Therefore, the proposed model has an environmental objective to minimize the GHG emissions and an economical objective to maximize the profitability of the SC. In this study, firstly the decentralized and centralized SCs are analyzed, and then, due to the government’s regulations, the Revenue Sharing (RS) contract and Delay in Payments (DP) contract are used to coordinate SC members. It should be noted that the proposed model is solved by the method of augmented epsilon constraint. Finally, sensitivity analyses of numerical examples show that the government’s policies, with a slight reduction in profitability of the whole SC, can reduce GHG emissions significantly.

Gross Split Contract Framework Regulation on the Caring for People

<p>This study aims to determine the model of oil and gas governance in Indonesia in terms of the interests of the State to protect natural resources that should be controlled for maximum use for the prosperity of the people. This study is based on the results of normative legal studies that are descriptive. The type of data used is secondary data obtained from literature study data collection techniques, which are then analyzed by carrying out systematic interpretation of the law. Systematic means, making a classification of written legal materials, to facilitate the work of analysis and construction. The results of this study show that oil and gas management arrangements began in the Dutch colonial period and continue to change with the times up to now, specifically the regulation of upstream oil and gas. Upstream oil and gas management has changed several times, namely the Concession system, the Contract of Work system, Production Sharing Contract (PSC) and finally the Gross Split Production Sharing Contract. The emergence of Gross Split aims to improve the PSC system and improve the efficiency and effectiveness of oil and gas production sharing patterns. Even though Gross Split still has weaknesses, but when compared to the previous system, Gross Split is more in line with the country's goal of being as broad as possible for the people.</p><p> </p><p><strong> </strong><strong>Keywords:</strong> Mining; Gross Split; Welfare State.</p>

Stabilisation and Renegotiation Clauses in Iraqi Kurdistan Oil and Gas Contracts: A Comparative Study

Oil and gas contracts with the long-term characteristic are the scene of colliding between international oil companies’ interests and host government’s interests. This characteristic could make such contracts vulnerable to unpredictable political, economic and legislative changes at the time of conclusion. Therefore, the contracting parties tend to use mechanisms to protect the economic balance they have reached from the conclusion until completing the contract. Contractual clauses are an effective mechanism to maintain the economic balance, various contractual clauses have been devised, of which stabilisation and renegotiation clauses are prominent types. This article aims to examine and evaluate the stabilisation and renegotiation clauses in the Iraqi Kurdistan Region oil and gas contracts. It elaborates on the concept and consequences of these clauses and provides a comparison of the clauses in the different countries’ oil and gas contracts. The research methods adopted in this article, include comparative analysis methods and the research is conducted through extensive study of the relevant literature. The principal finding from this study is the existence of deficiencies and shortcomings in stabilisation and renegotiation clauses within the Iraqi Kurdistan production sharing contracts. It is suggested that the Kurdistan Regional Government should review such clauses for its future oil and gas contracts. Keywords : Stabilisation Clause, Renegotiation Clause, Kurdistan Region of Iraq, Production Sharing Contracts, Indonesia and Nigeria. DOI: 10.7176/JLPG/100-10 Publication date: August 31 st 2020

Constitutionality In Production Sharing Contracts: Legal Policy On Petroleum And Natural Gas

This research is focused on constitutionality issue of Law No. 22 Year 2001 on Petroleum and Natural Gas and its relation to Article 33 of the 1945 Constitution and constitutionality of production sharing contract in relation to Article 33 of the 1945 Constitution. This research uses normative juridical method. This research founds: first, the current Law on Petroleum and Natural Gas and its relation to Article 33 of the 1945 Constitution is conceptually still problematic. This is evidenced by the several law articles which had been quashed by the Constitutional Court because they contradict the 1945 Constitution. Second, the petroleum and gas business contracts still contradict the spirit of Article 33 paragraph (3) of the 1945 Constitution, this can be seen by the granting of requests for judicial review of the Law on Petroleum and Gas in the Constitutional Court.

A NECESSITY OR A PREMATURE MOVE? THE SHIFT OF INDONESIAN PRODUCTION SHARING CONTRACT IN THE OIL AND GAS INDUSTRY

This article explains the current significant change in the business activities of the Oil and Gas Industry which Indonesia is experiencing. Production Sharing Contract (PSC) has been one of the mechanisms to flourish Indonesia's Oil and Gas Industry. It creates good cooperation and understanding between the State and the Contractors. However, Cost Recovery PSC, although long-established, has been generating a lot of problems. These problems were mounting up to the point where changing the financing scheme of the PSC seemed to be more feasible rather than creating policies that would stop the Contractors from asking for reimbursement. This article will explore whether the government's shift from Cost Recovery PSC to Gross Split PSC is a necessity or a premature move. The result of this research shows that the change is both a necessity and a premature move. On one hand, it is a necessity because the deterioration of the state revenue is worrying. On the other hand, it is a premature move because concrete regulations do not follow this shift, and it discourages the Contractors.Keywords:Regulated Industries, Oil and Gas, Production Sharing Contract, Cost Recovery; Gross Split; Indonesia.JEL Classification: K230DOI: https://doi.org/10.32479/ijeep.9024

The Hegemony of The Exxonmobil and Freeport Contract in Investing in Indonesia and Also The Abandonment of The Local People’s Health Rights

The type of contract carried out nowadays, which is the Product Sharing Contract (PSC) and contract of work in the natural resource sector results to product sharing, which is on one hand thought to not yet fulfill the principle of justice for the state. On the other hand, the government still needs funds from foreign investors to carry out economic development. The balancing position between the foreign investment and the domestic investment in the capital market investment in the oil, gas, and the gold-copper mining sector of Freeport in Papua and Exxonmobil in Indonesia shows a foreign domination. It means that there is a natural resource sector investment hegemony by foreign investors. The implication of this condition is the lightening burden of the state budget, the increase of workforce absorbment and the transfer of technology. It also causes opportunity cost. There is the environmental destruction, including the aspect of healthcare for the local people in the mining location as a compensation. For that, the government needs to review the contract regulation for these two natural resources and revise what is necessary.

Delivered pricing and endogenous delegation of contract type

AbstractThis article demonstrates for the first time that owners will delegate the location decision under delivered pricing using a relative performance contract rather than a market share contract. It goes on to evaluate the welfare consequences of this demonstration. With linear production costs and simultaneous location, both incentive contracts reduce welfare, but the chosen relative performance contract reduces it by less. Yet, with linear costs and sequential location, the chosen relative performance contract reduces welfare by more. Finally, with enough convexity in production costs, welfare can be improved by the chosen relative performance contracts.

Economic Evaluation of Fiscal Regime on EOR Implementation in Indonesia: A Case Study of Low Salinity Water Injection on Field X

There are currently two fiscal regimes designated for resource allocation in Indonesia’s upstream oil and gas industry, the Production Sharing Contract Cost Recovery (PSC) and Gross Split. The Gross Split in the form of additional percentage split is designed to encourage contractors to implement Enhanced Oil Recovery (EOR) in mature fields. Low Salinity Water Injection (LSWI) is an emerging EOR technique in which the salinity of the injected water is controlled. It has been proven to be relatively cheaper and has simpler implementations than other EOR options in several countries. This study evaluates the LSWI project’s economy using PSC and Gross Split and then to be compared to conventional waterflooding (WF) project’s economy. There are four cases on Field X that are simulated using a commercial simulator for 5 years. The cases are evaluated under PSC and Gross Split to calculate the project’s economy. The economic indicators that will be evaluated are the Net Present Value (NPV) and sensitivity analysis is also conducted to observe the change of NPV. The parameters for sensitivity analysis are Capital Expenditure (CAPEX), Operating Expenditure (OPEX), Oil Production, and Oil Price. It is found that LSWI implementation using Gross Split is more profitable than PSC. The parameters that affects NPV the most in all PSC cases are the oil production and oil price. On the other hand, in Gross Split cases, the oil production is the parameter that affects NPV the most, followed by oil price. The novelty of this study is in the comparison of project’s economy between WF and LSWI using two different fiscal regimes to see whether Gross Split is more profitable than PSC on EOR implementation, specifically the LSWI at Field X.

The impact of collective use rights on share contracts: the case of the Extractive Artisanal Regime (RAE) in Chilean hake fisheries

AbstractShare contracts are the dominant remuneration system in artisanal fisheries. Introducing regulations based on collective use rights may affect the way profits are distributed. The literature on the effect of regulatory reform on factor income distribution, however, is scarce. In this paper, we look at differences in the implementation of the Extractive Artisanal Regime in Chilean hake artisanal fisheries to test its effect on share contracts. We estimated a switching regression model using census data to calculate the average treatment effect. Our results show that crewmembers in communities regulated by some form of collective use rights receive, on average, 6 per cent more of total net incomes compared to those regulated by a limited access with global quota regime. Differences in the relation between crew size and labor rewards, as well as in the negotiating power of crewmembers under different regimes, may explain the results.

The Possibility of Nationalization by the Kurdistan Regional Government of Iraq under the Light of Signed Petroleum Contracts and Establishment of Kurdistan National Oil Company (KNOC)

In the past 20 years, Kurdistan Regional Government (KRG) of Iraq has signed hundreds of Production Sharing Contracts with many international oil companies to expand investment and develop its oil sector. According to the applicable laws in the region, in particular Oil and Gas Law No.22 of 2007, government shall work to establish Kurdistan National Oil Company (KNOC) to take charge of petroleum operations. Meanwhile, according to the same law, the duration of petroleum production sharing contracts shall not exceed 20 years with the possibility of five years extension. Despite the fact that KRG is abided to many legal obligations to share the produced oil under production sharing contracts, there is always a question of whether KRG will be able to administer its oil industry and what will be the future of these oil contracts? This paper argues that KRG cannot nationalize (by appropriating the whole oil industry and assets of foreign oil companies) its petroleum sector even after the establishment of KNOC as there are many legal terms preventing it from nationalizing the oil industry besides the lack of technical ability to run the sector without the direct support from foreign oil companies. Moreover, the paper also discusses different possibilities after the end of oil contracts with foreign international companies; Does KRG continue with the current contractual form or it will shift to other forms of contract such as service contract to develop oil industry in the region? It suggests that the best practice for the government is to institutionalize its oil sector with receiving direct support from oil companies. The establishment of KNOC is considered to be an effective step towards institutionalization of oil sector in the Iraqi Kurdistan Region.

Two Echelon Supply Chain with Vendor Managed Inventory and Revenue Sharing Contract under Shortage Gaming Scenario

Two Echelon Supply Chain with Vendor Managed Inventory and Revenue Sharing Contract under Shortage Gaming Scenario

Market Share Contracts in B2B Procurement Settings with Heterogeneous User Preferences

Market share contracts, a form of loyalty discounts, where the discount is contingent on the buyer meeting or exceeding a target share of total procurement, are common in many B2B settings. We study the impact of such contracts on demand allocation, prices, and welfare in a setting where a single central B2B buyer procures multiple units of a product on behalf of a set of users with heterogeneous preferences. We find that regular (linear) pricing creates a demand distortion, which goes away with the use of market share contracts. These contracts serve as strategic tools for vendors with preferred products to shift the locus of competition and extract away rents from weaker rivals, and sometimes from buyers. The impact of such contracts on the welfare of the buyers is therefore ambiguous, but when these contracts are used, the overall surplus goes up as disutility from demand distortion is avoided. While similar in many respects, quantity threshold contracts cannot guarantee the avoidance of demand distortion when buyer demand is uncertain.

Utilizing Production Sharing Contracts (PSCs) as a Means for the Protection of Indonesia’s Natural Resources

Indonesia has the potential to manage natural resources in such a way that social justice, public welfare, and the prosperity of the people is also realized. Contract law is the primary legal umbrella used in efforts to protect natural resources from exploitation. This study uses normative juridical methods that prioritize secondary data as the primary sources. This study shows the form of the legal protection of state assets related to oil and gas management including the government has the right of immunity, the existence of provisions regarding state revenue, state levies, and bonuses and the existence of provisions for contractors to distribute a portion of the production share. Thus, the government uses Production Sharing Contracts (PSC) to enter into oil and gas management agreements with contractors, specifically regarding upstream business activities. The Oil and Gas Law does not elaborate on the meaning of the PSC. Rather, it only states that the PSC is one form of the contracts.
 Keywords: Production Sharing Contract, State Control, Protection of Natural Resources.

Supply Chain Coordination with a Risk-Averse Retailer and a Combined Buy-Back and Revenue Sharing Contract

This paper investigates the ability of a combined buy-back (BB) and revenue sharing (RS) contract to improve the efficiency of a supply chain involving a risk-neutral supplier and a risk-averse retailer facing stochastic demand. We show that the combined contract can coordinate the supply chain under mild conditions. Further, the effects of risk aversion and contract parameters on the agents’ decision-making are analyzed when the retailer’s risk aversion is modeled by the conditional value-at-risk (CVaR) criterion. In contrast to individual BB and RS contracts, the combined contract is able to mitigate the effect of risk-aversion and allow the supplier to obtain higher expected profit. Moreover, situations exist where the combined contract can coordinate the supply chain when neither the BB nor the RS contract can coordinate it. Numerical experiments conducted further confirm the analytical results derived.

Monte Carlo Net Present Value for Techno-Economic Analysis of Oil and Gas Production Sharing Contract

Monte Carlo Net Present Value for Techno-Economic Analysis of Oil and Gas Production Sharing Contract

Risk and rewards dynamics: Measuring the attractiveness of the fiscal regime in the presence of exploratory risks

The government needs to consider risk when designing a fiscal regime and oil companies need to assess prospect's risks when facing investment decisions. This paper analyzes how the fiscal regime dictates the risk-reward partition between companies and the government in a portfolio of prospects. The expected monetary value is provided as the decision criteria, and a decision model is presented where all the prospects are graphically represented. The fiscal regime's contract is generalized as a mathematical function and plotted together with the exploratory opportunities. This type of representation helps the policymakers to fine-tune petroleum contracts. It is also of great value to companies because it helps to understand the risks and rewards of a portfolio. We used the recent Brazilian fiscal regime change from a royalty and tax contract (R/T) to a partition share contract (PSC) to understand the impacts of the fiscal regime in the risk-reward balance of the prospects located at the recently discovered Pre-Salt geologic province offshore Brazil. We show how the policymakers can fine-tune the fiscal regime and how companies can better understand the contracts considering both the rewards and the risks involved.

Green Supply Chain Analysis Under Cost Sharing Contract Considering Consumer Willingness to Pay

Green Supply Chain Analysis Under Cost Sharing Contract Considering Consumer Willingness to Pay

Research on the Loss Sharing Contract in Supply Chain Under Asymmetric Information

Abstract In this study, the coordination contract of internal and external losses of supply chain under asymmetric information is studied. Firstly, the profit functions of supplier and manufacturer are established respectively. Secondly, the contract under unilateral and bilateral moral hazard is designed. Finally, a numerical example is given to analyze the coordination contract. It is proved that the overall coordination of supply chain can be achieved through loss sharing contract, and the quality level and overall profit can be improved.

Modeling an oncology outcomes-based contract using a blockchain database approach: Cost and technology considerations.

e18360 Background: Cost of care is an ongoing concern for all oncology stakeholders. Outcomes Based or Risk Sharing contracts are increasingly discussed, but difficult and costly to implement. The literature notes barriers of outcomes definition, reliable data sources, and technology enablement. The authors sought to design and test software that could enable faster, lower-cost, and auditable administration of such contracts. Methods: The authors developed software using blockchain databases and transactional proof of work to simulate such a contract and to compare the financial result to usual fee-for-service reimbursement (FFSR). The software processed a synthesized Medicare claims dataset and Average Sales Price (ASP) data from 2008-2010, looking for use of the Bevacizumab(BV)/Carboplatin/Paclitaxel(CP) regimen in non-small cell lung cancer (NSCLC). The contract hypothesized a scenario that offered payers a discount for “underperforming” BV doses (defined as doses given to a patient with < 9 mo. BV duration) and required a bonus payment for “overperforming” BV doses (defined as doses given to a patient with > 14 mo. BV duration). These parameters were selected based on survival data supporting the 2007 FDA approval of BV/CP in 1L tx of advanced nonsquamous NSCLC. Results: The software successfully processed the claims dataset and projected financial results (additional/saved cost) to the payer in this hypothetical contract compared to FFSR. The software also enabled comparison of different hypothetical contracts, inclusion/exclusion rules for claims, and discount structures. The software accurately categorized doses according to the defined logic. Conclusions: Outcomes based contracts have potential for better aligning oncology reimbursement with meaningful results, particularly for costly therapeutics and where patient response or outcome is difficult to predict. While such agreements are recognized as difficult to implement, a software platform that facilitates efficient and scalable design, simulation, and implementation of such agreements, under constraints of real world data availability and sharing, may advance their adoption.

Coalbed methane development in Indonesia: Design and economic analysis of upstream petroleum fiscal policy

Due to increasing demand for natural gas in Indonesia, the Government now promotes exploration for coalbed methane (CBM). Currently, Indonesia has 453 trillion cubic feet (TCF) of CBM reserves. However, CBM development in the country is still in the exploration phase, with significant under-investment. To attract investors, a tailored Production Sharing Contracts (PSC) regime is required. Based on a combination of Factor Analysis (FA), Discounted Cash Flows (DCF) and Parameter Sensitivity Analysis, the research explores an optimal scenario of a company's share of revenue that optimised CBM development contracts. We find that a combination of 5 years straight line depreciation (SLD), 5% First Tranche Petroleum (FTP), 78% Contractor Share (CS) and 35% income tax best spreads the risk of CBM development and exploitation between the government and the contractor. This combination is a more suitable PSC regime for developing CBM in an early stage of the industry. Therefore, the Government must cede some taxes during exploration to incentivise CBM development. Three PSCs regimes are thus required to fully develop and exploit CBM, including exploration, transitional and exploitation phase PSCs which better match contractor risks and returns and ensure reasonable certainty of contractor cost recovery.