Diagnose the conflicts in production sharing contracts between oil companies and government is of key importance in oil & gas industry. Among the principal creation of such problems are the recoverable costs. However, this is a property that is difficult to observe. On the other hand, transparency from the production of a field is a crucial point to the audit. If the government has a clear view of the production of a field such conflicts could be avoided.
The research work presented herein demonstrates the design and the development of a real time financial simulation, using basic principles of the industry aims to contribute toward this issue. The scope of the study is to give to the government a clear view of the economics from a particular field. At any time both parties could have a view of the production, the income, the costs and the taxes. Such simulation could help companies and governments to cooperate and bring a transparency to the industry; which appears not to be in our days. In addition it will provide a clear view of the economic aspect of the oil price according to the production and it costs only.
The method proposed exploits the flow meter tools in a real based approach to give the production of a field that it's coming from the pipeline. It interacts with the main console and the principles that have been inserted so it will give to the user the appropriate information. The main input is that and some other inputs are the material costs, the labor and the equipment, which are inserted automatically also.
The simulation was validated with a real case scenario and the production of a field to help us understand the calculations and the results. The validation was based on known profits, costs, taxes, etc. and shown results that there was close to those who where simulated. The PSC that has been simulated is the Cyprus government contract for its EEZ.
As for the application of this simulation, it can be very useful for the governments to check their sharing percentages and bring a transparency to the industry but also to the companies which can have a clear view of the economics of a field at any time.
The goal of this work is to bring a transparency to the industry, help governments understand the oil pricing of the companies, help the real time decision of the user using the economics of the production.