Exclusive interview with Gacyen MOUELY MOUANGA, Co-Managing Partner of 3M-Partners & Conseils
Ahead of the Oil Days planned in Dubai, Financial Afrik met with Gacyen MOUELY MOUANGA, Co-Managing Partner of 3M-Partners & Conseils.
You organize oil days in Dubai on the impact of controls in the management of Production Sharing Contracts (PSC). Can you tell us about Oil Days?
The oil days initiative is based on two observations: Firstly, the controls carried out by the administrations do not always cover all aspects of the Production Sharing Contracts (CPP). Secondly, the African administrations in charge of managing these contracts do not communicate enough with each other.
It is in this context that the “Oil Days” were initiated. They are intended to be a frame of reference for sharing experiences and best practices.
For this first edition, the chosen theme is “The impact of controls in Production Sharing Contracts (CPP)”.
The objective is to provide participants with practical tools to improve the monitoring of these contracts in order to guarantee the interests of African States. To this end, eight French-speaking African countries were invited to discuss the problems encountered in order to find appropriate and tailor-made solutions.
How were the topics to be covered chosen?
The themes proposed were based on the problems and weaknesses encountered during the CPP audit missions. Several themes will be addressed, in particular the control system in the CPPs with data compared by country or production control.
To exercise effective and efficient control, it is important for administrations to know what the contract provides for, hence the interest of the first theme mentioned.
The choice of the theme on the control of production is justified by the fact that production is the central element of the PSC on the one hand, and the origin of the revenues of the oil States on the other hand. Thus, for example, they represent up to 95% of Angola’s export earnings, 75% of those of Congo Brazzaville and 70% of those of Gabon.
Consequently, it is important that production be subject to perfect control by the States.
How would you define the production sharing contract (PSC)?
The CPP is a service contract signed between a State and an oil company with the particularity that the financing and execution of oil operations are entrusted to the latter. In the event of a discovery, the production as well as the investments made become the property of the State. To this end, the latter undertakes to reimburse the costs incurred on part of the production, the remaining share is thus shared between the State and the oil company. This mechanism guarantees the State regular access to production.
Moreover, this contract allows the States, throughout the oil exploitation, to have control over the technical, financial, administrative, social and environmental aspects. Also, the right of control by the State can be exercised before, during and after the conduct of oil operations.-
In summary, the CPP is a service contract allowing the States to deepen their knowledge of the oil sector, and to have a regular share of production.
We imagine that one of the challenges of this contract would be for the State to assess the costs of the investments made by the partner?
Absolutely. The philosophy of this contract is to allow transparency in the operations of oil companies through the planned control mechanism. The State has a central role in this contract.
What are the main points of comparison between sharing contracts and concession contracts?
The concession contract is a contract in which the State concedes to an oil operator a given space for carrying out its activities. In this model, the production obtained as well as the investments made are the property of the operator. The only revenues of the State are the taxes and duties due by this taxpayer.
To return to the central theme of the Oil Days, what is the impact of controls in the management of production contracts?
This theme will contribute to significantly improving the monitoring of these contracts because practical tools will be made available to participants.
What are the good practices to be observed within the framework of the CPP?
The CPC is the law of the parties. To this end, compliance with the provisions of this contract constitutes a guarantee of trust between the parties.
We present to you the question of the quantification of the costs of the investments made within the framework of the CPP. How to ensure the accuracy of the production evaluation?
Due to the importance of this data, the provisions of the CPP specify the conditions for determining production to be taken into account.
These conditions can also be changed because the CPP wants to be fair, it gives the possibility to its signatories to make amendments to the contract. New modes of control can be introduced to best guarantee the interests of the parties.
Finally, how to present the 3M-Partners firm? What are its service records in the field of hydrocarbons?
3M-Partners & Conseils is an independent African firm offering services in the fields of law and taxation, control with auditing and statutory auditors, and finally advice.
For fifteen years of existence, the firm has successfully carried out nearly 1,500 assignments in 20 areas of activity. In addition, we have developed specific expertise in the oil sector, particularly in support missions to States relating to the audit of oil costs, and those carried out alongside national hydrocarbon companies within the framework of association audits.
Our firm is often cited as a reference in supporting States by offering proven expertise and tailor-made solutions.
