WHAT IS THE ROLE OF OVERHEAD COST RECOVERY IN PRODUCTION SHARING CONTRACTS?
GULZHAN NURAKHMET? gnurakhmet@yahoo.com ABSTRACT: The concept of overhead is often intuitively connected with an ill-defined charge, sometimes expressed as a proportion of some other well defined cost, and often unaudited. Many petroleum fiscal regimes allow the contractor to recover some administrative and overhead expenses. The definition and the procedure are usually set in the accounting annex of the Production Sharing Contracts (PSCs). However, some PSCs avoid the term “overhead” by substituting this term for “general cost”, “cost and expenses of the activities”, “administrative overheads”. As a result, it creates grounds for various interpretations. The role of the overhead as well its nature has not been studied widely. Recovery of the overhead costs in petroleum agreements had been researched in 1993 by Mr. English. Almost 13 years has passed since then and there is still a strong need to continue this study. ? Gulzhan Nurakhmet, a Kazakh qualified lawyer. She has practiced as
