In contrast, the production sharing contracts offered by the Kurds do allow the booking of reserves and no cap on profit potential.

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Some observers have suggested that the decision to award service contracts, instead of the more common production-sharing contracts, was taken to make it easier to proceed without such a bill being passed.

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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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In 2005, the government passed a controversial hydrocarbons law that imposed significantly higher royalties and required foreign firms then operating under risk-sharing contracts to surrender all production to the state energy company in exchange for a predetermined service fee.

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