Pure service contractsA pure service contract is an agreement between a contractor and a host government that typically covers a defined technical service to be provided or concluded during a given period of time. The investment of the service company is usually limited to the value of the equipment, tools and personnel used to provide the service. In most cases, the reimbursement of the service company is set by the contractual conditions, without affecting the performance of the project or market factors. Payment for services is normally based on daily or hourly rates, a fixed turnkey price or another declared amount. Payments can be made at set intervals or after the completion of the service. Based on our understanding and decades of experience in the oil and gas industry, our oil and gas team provides all the commercial, financial and technical services necessary to conclude this agreement. In Ecuador, previous production sharing contracts have been used. The process of exagration of international oil companies from accepting the terms of use began in 2007. The transition to service contracts was part of a broader policy shift by the Ecuadorian government towards greater state control of the oil sector. Production Sharing Agreement (PSA) «PPE is a contractual agreement between foreign contractors or FOCs and a designated state-owned national oil company («NOC»), which authorizes contractors to conduct oil exploration and exploitation in a given area, in accordance with the rules and conditions of the agreement. The PSA is a risk contract in which the FOC receives remuneration for costs and benefits in the form of hydrocarbons and «the FOC takes them as profits in its accounting system, then hydrocarbons that must be taxed by the competent tax authority. Based on our extensive experience in concluding this contract, we can offer our customers well-thought-out commercial and technical services at all stages, from idea to implementation.

(ii) The service contract does not accept access to oil produced under such a contract Under risk service contracts, oil companies, also designated as contractors, undertake to grant all capital and service risk for exploration and exploitation. In return, if exploration efforts are successful and the oil is produced, the government authorizes the contractor to cover the costs by selling the oil or gas. In addition, the contractor receives a royalty per barrel of oil, which is then produced for its risk and expertise, although there may be provisions allowing the company to repurchase a quantity of crude oil at established international production prices. The tax is often taxable. Since the service agreement sets the company`s remuneration, the emphasis may be more on work to the satisfaction of the host country than on the company`s own enrichment. Companies entering into a service agreement simply need to provide their expertise to earn their costs and not interfere in how the leaders of the host country want to manage and use these resources. The contract management team, in particular, must ensure compliance with any administrative mandates and timely implementation to ensure a positive outcome. Of course, companies bring not only capital that a government would not otherwise have, but also all the necessary expertise and technological tools. The advantage of the service agreement is that the external company is expected to provide a service and, as with any service-oriented business, the goal should be to ensure customer satisfaction. . .

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