Evaluation of upstream petroleum agreements and exploration and production costs

Recently, several major petroleum-exporting countries opened their upstream petroleum sectors to investment by international oil companies via various types of agreement, such as royalty/tax systems, production-sharing agreements and/or risk service agreements. This article evaluates upstream petroleum agreements and examines exploration and production (E&P) costs in major petroleum-exporting countries, with the intention of determining the relationship between the type of upstream petroleum agreement and E&P costs. It uses data obtained from experts and then splits the available data into three categories: low E&P cost countries (costs equal to or below $4.65 per barrel), medium E&P cost countries (between $4.65/b and $8.50/b) and high E&P cost countries (more than $8.50/b). The paper includes specific outlooks for selected countries to examine this relationship. Finally, the article ascertains that total E&P costs are one of the main factors that determine the type of upstream petroleum agreement host countries are willing to adopt.