Assessment of Production Sharing Agreement (PSA) as a strategic Management Tool for Oil and Gas Companies in the Ogaden Basin.

Abstract

The aim of this thesis is to test the use of product sharing agreements in making strategic decisions while working in petroleum exploration and development in Ethiopia (especially in the Ogaden basin). Ethiopia's Oil and Gas Industry is growing and is attracting lots of interest from exploration companies. For this reason the author decided to research the past of this industry and its present status, with the aim of describing how it can change and improve. Descriptive research based on non probabilistic approach was carried out using primary and secondary data collected through semi structured interviews and observation.. This thesis first examines and assesses the PSA contract and the contractual parties. In a second stage, the several levels of reporting process of the IOCs in Ethiopia to the Ministry of Mines is observed. Thirdly other laws relating to the oil and gas industry in Ethiopia are discussed. Finally the research comes up with the advantages and disadvantages and the risks and rewards of the terms of the PSA. The results of the research shows that the contract can be a good way to regulate the project (if negotiate to benefit both parties) in spite of the demerits for the contractor. The author recommends further research on the industry, further familiarization with other laws governing and affecting companies that work in that industry and unique tailoring of the PSA to suit every situation.