Date of Award
2024
Degree Type
Dissertation
Degree Name
Doctor of Business Administration (DBA)
Department
Business Administration
First Advisor
Georges Tsafack
Abstract
This mixed method research uses interviews and stochastic cash flow “meta-modelling” to investigate the applicability of Oil & Gas industry Production Sharing Agreement (PSA)-like contract terms to offshore wind energy. The qualitative analysis, consisting of interviews with Oil & Gas professionals, found that many of the advantages of PSAs would also be applicable to an offshore wind farm and attractive to both parties to the contract. The quantitative research demonstrated the conceptual feasibility of the PSA contract structure to offshore wind energy using a stochastic cash flow model. The contract terms governing Royalty, Cost Recovery, Profit Sharing, Uplift, and Taxes were applied to the offshore wind farm used in the study, creating a profitable project for both parties. Further, it illustrates that a contract structure in which the Government takes its cash flow from the profit rather than gross revenue encourages marginal projects. This research advanced the stochastic cash flow method pioneered by Kaiser and Pulsipher in the 2000s (Kaiser & Pulsipher, 2004a) by considering both Contractor and Government outcomes. The model captures the impacts and trade-offs between the contract terms in a transparent manner which would be a key element for acceptance by any contract party at an informational disadvantage. The model also provides a framework for optimisation, illustrating combinations of terms that maximise project NPV whilst also honouring an acceptable split between the parties.
These results illustrate the potential for an alternative leasing mechanism for offshore wind energy which may be attractive to developing countries, especially those familiar with the advantages enjoyed when leasing for hydrocarbon activity using PSAs.
Creative Commons License
This work is licensed under a Creative Commons Attribution 4.0 License.
Recommended Citation
Croskell, Helen, "THE APPLICABILITY OF HYDROCARBON PRODUCTION SHARING AGREEMENT CONTRACT TERMS TO OFFSHORE WIND ENERGY PROJECTS" (2024). Open Access Dissertations. Paper 1673.
https://digitalcommons.uri.edu/oa_diss/1673