Commentary on Sections Glossary Structure of Part 2 Section 167: Oil production sharing contracts
618.This section and sections 168 to 171 are based on section 64A of CAA 1990. They deal with oil production sharing contracts. In summary:
	a production sharing contract is a contract between an oil enterprise (normally a company) and a government for production of oil to be shared between the company and the government;
	the contractor develops the field under the contract and incurs expenditure on plant and machinery to generate the production;
	the contract provides that the plant and machinery is transferred to the government;
	the contract may be exclusive or there may be other companies involved (“participators”);
	the contracts may be transferred; and
	the ordinary plant and machinery rules do not entitle the companies concerned to allowances because they do not own the plant or machinery. Furthermore the transfer itself is a disposal event.
619.This section explains what is meant by a production sharing contract. Sections 167 to 171 give entitlement to allowances and prevent the transfer being a disposal event.