Production Sharing Contract Dispute - When Things Go Sour
Arbitration, Europe
Introduction: A dispute arose when the government terminated its production sharing contract due to unforeseen gas processing facility engineering design requirements for sour gas treatment. Baker & O’Brien assessed whether the development concept and gas commercialization plan conformed with prudent international petroleum practice. We produced several expert reports, including a joint expert report, and testified at hearings before an arbitration panel.

The development of gas resources, or the joint development of oil and gas resources, is significantly more complex than developing standalone oil resources. It requires a comprehensive and coordinated plan along the entire gas value chain, from wellhead to end user, which is often referred to as a gas commercialization plan.
The development of sour gas resources, that is, natural gas with significant amounts of hydrogen sulfide (H2S), increases the technical complexity of the development. Additional gas processing facilities are required to remove the acid gas components of H2S, carbon dioxide, and any inert elements in order to produce a saleable product. The timely financing and construction of these gas processing facilities are essential to any gas commercialization plan involving sour gas.
A dispute arose when the Government terminated its production sharing contract due to unforeseen gas processing facility engineering design requirements for sour gas treatment. Baker & O’Brien was engaged to assess whether the development concept and gas commercialization plan conformed with prudent international petroleum practice. Our independent analysis included reviewing field development plans, detailed Front-End Engineering Design (FEED) studies, and sulfur disposal plans. We also performed the requisite economic analysis of the planned gas processing plant to determine its viability.
Baker & O’Brien’s experience working on many international oil and gas developments allowed us to evaluate whether the development plan aligned with international industry norms. We produced several expert reports, including a joint expert report, and testified at hearings before an arbitration panel.
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Ajey Chandra
Chief Executive Officer
- Industry
- Natural Gas & NGLs
- Service
- Litigation / Arbitration / Expert Witness Testimony
- Region
- Middle East and Africa