He has been trying since 2007 to change foreign oil contracts from production-sharing agreements, under which the foreign producers can have partial ownership of the fields they operate, to servicing contracts, under which the producers would have to pay a production fee and then get reimbursed for the cost of their investment.
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ExxonMobil earlier in the decade had won a key battle against Russian oil companies by obtaining a production-sharing agreement, which gave it more protection against arbitrary tax increases.
Under a production-sharing contract, an oil company would recoup its costs and then be entitled to a proportion of the oil extracted, instead of being paid a fixed fee for each barrel.
In 1996 Gandur made the salmon leap from the downstream activities of oil trading and marketing, which provide thin margins by moving huge volumes of other people's oil, into the upstream, which entails more risk and upfront investment but offers fatter returns. aog inked its first production-sharing contract with the oil minister of Ivory Coast to overhaul the abandoned offshore Espoir oilfield.
The region holds less oil than Iraq's south, but the production-sharing agreements on offer to investors are far more enticing.
Pre-Sal Petroleo would also run a new contract system that allows the state to implement production-sharing agreements that would direct more of the oil windfall to the state than to the oil companies whenever the price of oil goes up.
Fereidun Fesharaki, Chairman of FACTS Global Energy, says "Gadhafi rules" still apply in the oil fields with international energy companies getting a maximum of 10% on production sharing agreements.
In 2002 Jalal Talabani, then president of the the Patriotic Union of Kurdistan (now president of Iraq), signed up Turkey's Petoil and Genel Enerji to the first production-sharing agreements, under which the Kurds were promised roughly half of any oil produced.
But under a production-sharing agreement, the Kazakh government still stands to make a lot of money if the oil does flow: it will take an 80% share of any profits.
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