While Nigerian joint ventures are subject to a standard PPT of 85% after the initial rate of 65.75%, which applies until a company has covered the pre-production costs, PSCs are subject to the PPT flat rate of 50%. As a result, joint ventures appeared to be optimal. Production-sharing agreements can be beneficial for governments in countries that do not have the expertise and/or capital to develop their resources and wish to attract foreign companies to do so. They can be very profitable deals for the oil companies involved, but often carry a significant risk. In production-sharing agreements, the country`s government assigns the execution of exploration and production activities to an oil company. The oil company bears the mineral and financial risk of the initiative and explores, develops and produces the field as needed. If successful, the company can use the money from the oil produced to recover capital and operating expenses called the « cost of oil ». The remaining money is known as « profit oil » and is divided between government and corporation. In most production-sharing agreements, changes in international oil prices or the rate of production affect the company`s share of production. However, issues such as economic pension arising from contractual arrangements, accountability and transparency of transactions in the oil and gas sector are becoming a source of concern for policymakers and universities. For example, Bindemann (1999) suggested that maximizing the economic pension of industry players is the driving force behind the transition from one contractual agreement to another. Accountability and transparency in the oil and gas sector are believed to be responsible for the diversion of oil revenues (Yumiseva, 2005) due to poor governance, corruption, conflict and poverty.

Similarly, oil and gas activities in the Ecologically Sensitive Area (ESA) have led to various types of problems, including greenhouse gas emissions, pollution and other social vices (Arscott, 2003; Miranda and Malik, 2008). Over the course of a decade, the growing recognition that improving transparency and accountability for the huge revenues of the oil and gas industry is crucial to avoiding the resource curse and extending the benefits of abundant oil and gas resources to poverty reduction (AFDB, 2007). As a result, various international initiatives, mechanisms and policy standards have been put in place to address these issues, improve governance and reduce the observed environmental and socio-economic impacts of extractive industry activities. The most important of these are; the Extractive Industries Transparency Initiative (EITI) and the international campaign publish what you pay (PWYP). Since IOCs are always looking for a viable and sustainable investment framework, joint ventures under the PSC regime are seen as a viable tool to achieve this goal, as this is more likely to result in better returns, unlike SCs. Although there are still crucial aspects to be assessed when it comes to the application of CS or CSPs as the framework defining the JOAs. Countries in the MENA region need to rapidly change these regulations regarding upstream joint ventures, particularly issues of exploration and production cost sharing, the cost recovery process, and competition in the energy market. « However, undesirable consequences can be avoided through a well-designed agreement that accurately represents the intentions, rights and obligations of the parties, » he noted.

JOA`s role is to have exactly that effect. « The task of the JOA is to reduce tension and use the right to vote to make decisions and keep the peace, » Said Ahmed Saleh. With respect to joint ventures, Joint Operating Agreements (JSAs) shape the activities of joint ventures in the exploration and production of oil and gas resources. The JOA provides a set of rules and regulations that govern the business activities of the parties involved for the duration of the joint venture. The main interest of the JOA is to provide mechanisms that protect the business project and minimize threats to the stability and longevity of joint venture projects. Conceptually, the JOA represents a « constitution » or benchmark for joint ventures for liabilities, transfer of interest, accounting procedures, dispute resolution and withdrawal procedures. As a result, two important contractual arrangements arise from oil development rights, namely the Joint Venture Agreement (JV) and the Production Sharing Agreements (under contractual agreements). In the case of joint venture agreements, the host government, as the owner of the union interests, participates in the concession system, where a joint operating agreement (JTA) is often entered into to carry out the operations. In fact, the host government has a predetermined ownership quota in oilfield development and production operations and therefore shares exploration, drilling and development expenses (Brock et al., 2007). It also shares the benefits that result from operations.

It is estimated that about 60% of the JOAs, whether SC or PSC, do not start or fade within five years of their existence. « There are many reasons for these failures, but the majority of deals fail when one party tries to take control, » Ahmed Saleh, senior field engineer for artificial elevators at Schlumberger – REDA Production Systems, said in an interview with Egypt Oil & Gas. In the case of Libya, the favourable conditions of the country`s EPSAs were deemed appropriate and therefore extended, unlike the recent situation in the country, when only Wintershall benefited from the ESPA regime. After applying the ESPA to new players, the president of the Libyan National Oil Company, Mustafa Sanallah, convinced Total to re-engage in Libyan onshore exploration and production. .