Governments normally choose from many contracts to delegate oil and gas exploration and development. The form of the contract changes between and within countries, but the most common contracts are concession contracts and production sharing agreements (EPI). Finally, as part of the concession agreement, the IOCs will take full ownership of the assets acquired as part of the enumeration. These assets can be transferred free of charge to the host country at the expiry of the agreement The question therefore remains for the Egyptian oil and gas industry to know what type of these agreements is most appropriate to be implemented. Based on the aforementioned characteristics of the three types of basic agreements and the tax system of all kinds, it appears that RSC could be the most favourable model for oil exploration and use in Egypt. The contractor`s share of profits is taxable; However, some UNCs are exempt from paying taxes to the contractor and other countries have paid these taxes on behalf of the contractor and on behalf of the contractor on his own share of the production. After making the commercial discovery, whether for oil or gas, EGPC and the contractor form a joint venture that conducts all operations to develop the discovery and exploration operations of the territory (operating company). The share of the operating company`s capital is divided by 50% between EGPC and the contractor. The Board of Directors consists of eight members, four of whom are appointed by the CEPCE and the other four by the contractor. The president of the operating company is appointed by EGPC and appointed Managing Director.
In both cases, the IOC supports all financial risks, provides the necessary means, equipment, know-how and qualified personnel. However, there are several differences between the two – the concession agreement and the PSA – that should take into account the IOCs. A joint venture between a foreign oil company and a national oil company in the host country. For a government, a joint venture is a technology transfer opportunity that can ultimately lead to the independence of the national oil group.