PETROLEUM

Definition:
Petroleum is the liquid found deep within the Earth’s surface. Although it’s
commonly found in liquid form, underneath the earth’s surface, it can also
be in the form of gas, is also used to make asphalt.
Definition of 'petroleum engineer'

 A petroleum engineer is an engineer who is involved in most stages of oil and

gas field evaluation, development, and production, whose job is to maximize
hydrocarbon recovery and reduce costs and environmental impact.
 The petroleum industry, also known as the oil industry or the oil patch,
includes the global processes of exploration, extraction, refining, transporting
(often by oil tankers and pipelines), and marketing of petroleum products.
The largest volume products of the industry are fuel oil and gasoline (petrol).
Petroleum (oil) is also the raw material for many chemical products, including
pharmaceuticals, solvents, fertilizers, pesticides, synthetic fragrances, and
plastics. The extreme monetary value of oil and its products has led to it
being known as "black gold". The industry is usually divided into three major
components: upstream, midstream, and downstream. Upstream deals with
Drilling and Production mainly.
CONT

 Petroleum is vital to many industries, and is necessary for the maintenance of

industrial civilization in its current configuration, making it a critical concern
for many nations. Oil accounts for a large percentage of the world’s energy
consumption, ranging from a low of 32% for Europe and Asia, to a high of 53%
for the Middle East.
 Other geographic regions' consumption patterns are as follows: South and
Central America (44%), Africa (41%), and North America (40%). The world
consumes 30 billion barrels (4.8 km³) of oil per year[citation needed], with
developed nations being the largest consumers. The United States consumed
25% of the oil produced in 2007.[1] The production, distribution, refining, and
retailing of petroleum taken as a whole represents the world's largest industry
in terms of dollar value.
CONT

 Governments such as the United States government provide a heavy public

subsidy to petroleum companies, with major tax breaks at virtually every
stage of oil exploration and extraction, including the costs of oil field leases
and drilling equipment.
 In recent years, enhanced oil recovery techniques — most notably multi-stage
drilling and hydraulic fracturing ("fracking") — have moved to the forefront of
the industry as this new technology plays a crucial and controversial role in
new methods of oil extraction.
Commercials
 

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 Contract area
Means the area where contractor is appointed to carry out petroleum operations, as described and outlined in
Exhibits “A” and “B” attached here to and made part hereof, less all areas relinquished pursuant to this
contract.
 Contractor
Any person or company that contracts or subcontracts to perform all or any part of oil and gas well production
operations. As a contractor,the primary goal and mission will be to secure a job from the operator. Contractors
will have a particular specialty with in the industry that can offer some sort of service to the operators. All
different types of contractors work for operators to help achieve the goal of drilling,completing and producing
well.
 Oil Contracts
If an oil company declares a commercial finding, contracts stipulate that the petroleum company should
prepare and submit for approval of the host state its development plan. This plan is a long term plan for rapid
development and production of petroleum from the contract area.
Petroleum Licensing and Contracting

 Types of upstream petroleum contracts with the state

Once the principles of the agreement have been determined, the model contract
will need to be detailed to accommodate the specific issues and conditions
relating to each project. Three basic, alternative types of agreement typically
govern the relationship between government and investors.
 Petroleum agreements
 Is an agreement with the contractor for the purpose of exploration, development and
production of petroleum. This agreement provides for the exploitation for and
development and production of petroleum in contract area.
 These three types of agreement are explained in the sections that follow.
 Concession agreements
 Under concession (or licence) agreements, the selected petroleum company or consortium
carries out exploration activities. The company takes ownership of all production, when
extracted, against payment of a royalty to the host state. The royalty could be in cash or
kind. It could also be in the form of income tax on profits or other type of fees and
contributions, including possibly an additional tax on profit when this exceeds a
predefined threshold. This type of contract is known as a license and commonly gives the
holder an exclusive right to explore and exploit petroleum, own and market the
production and own the relevant equipment and installations. 
 Production sharing agreements
 Production sharing agreements do not confer rights of ownership of petroleum
production on the company or consortium that concludes the agreement.
Instead, the company receives a share of the overall production. The balance
of production belongs to the host state.
 Under this type of agreement, therefore, the company or consortium provides
technical expertise and capital and assumes project risk in return for exclusive
rights to explore and produce oil and/or gas from the contract area. The host
state generally owns the equipment and installations. Unless stated otherwise
in the legislation or the production sharing agreement, the company also pays
income tax on profits to the host state as well as any other taxes and
contributions provided for in the legislation and the relevant contract. 
Risk service agreements

 Risk service agreements are the least-used agreement type among the three
mentioned here. They have been used by states that take a nationalistic
approach, or by countries like Venezuela, Iran or Iraq which have long-
established petroleum production. Under this type of agreement, the host
state merely hires the service of a petroleum company or consortium to
benefit from its financial and technical expertise. The company or consortium
assumes the risk and liability and is reimbursed by a service fee, usually paid
in cash. An example of this type of agreement is Iran’s now defunct buy-back
agreements, which eventually proved too onerous for any private sector
investor to take up. 
Examples of service agreements adopted and areas
covered

 Angola, Egypt, Kenya, Tanzania, Uganda, Mozambique are among the

countries following the production sharing agreement model, while Ghana
uses the exploration and production concession contract model. 
 All three types of petroleum agreements are usually signed between a
petroleum company or consortium and government. They typically regulate
the following areas:
Agreements between petroleum companies

Upstream contracts are often entered into by several companies acting together in a consortium, for the
purposes of sharing risks, costs and financing. The relationships between them are governed under various
types of agreements. These should always be aligned with the terms of the licence or contract awarded by
the host country for the area concerned. 
Following the award of a licence or contract, one entity constituting a consortium may decide to assign, sell
or transfer all or part of its interest to another company. Such a transaction is called a farm-out (by the
assignor) or a farm-in (by the assignee). It is generally subject to the approval of the government or
minister.
The following sections explain the types of agreements typically undertaken by petroleum companies, which
are:
• Joint operating agreements.
• Joint ventures.
• Farm out agreements.
• State participation agreements.
• Unitisation agreements.
Joint operating agreements (JOAs)

 Due to the high level of risk in the upstream petroleum sector, companies
often spread risk and costs by working together in a joint venture. This is
generally done by all parties signing a joint operating agreement, often with
the participation of the host state or its National Oil Company. This can give a
country access to the technical expertise of International Oil Companies and
allow participation in decision making. International Oil Companies and
consortia may also be required by host state regulation to operate petroleum
activities jointly. 
Joint ventures (JV)

 A joint venture (JV) can be structured in two ways, either as an unincorporated JV

or an incorporated joint venture. An unincorporated JV does not create a separate
legal entity, and the relationships among its participants are governed under an
unincorporated joint venture agreement. This is the most common structure used
in international petroleum contracts, for example under Joint Operating
Agreement (JOAs), as described above. Furthermore, the interest shares in a non-
incorporated joint venture are undivided, and instead of the “JV” as a legal entity,
a commonly assigned joint operator or a committee manages the operations.
 Normally, before establishing a joint venture, the participants will acquire the
petroleum right from the state. This might be acquired through a joint bidding
procedure, or the ownership might be already vested in the participants of the JV.
Ownership can be assigned to other participants if approved by the host state,
prior to signing a joint bidding agreement. Generally, a confidentiality agreement
is also signed, as parties often share sensitive technical data. 
State participation agreements

 State participation agreements are signed between a state or its designated

authority and companies to allow the state or a state-authority, a National Oil
Company or an ad-hoc state entity established for this purpose, to commercially
participate in the Joint Venture. The rationale for the host state is to be involved in
decision making and benefit from the technical expertise of the International Oil
Companies. State participation agreements also enable the activities of the Joint
Venture to be supervised directly and ensure security of supply. As participation is
on a commercial basis, this type of agreement is particularly popular in a high price
environment.
 In state participation agreements, the state becomes an investor and hence assumes
risk and shares the profits from production and marketing derived from the
applicable petroleum contract, like the other signatories of the joint operating
agreement. State participation may be required by the host state’s regulations, as is
the case in the Norway and the Netherlands or it could be voluntary. There is no
state participation in the UK. State participation clauses may be inserted into the
concession agreements or PSAs or they may be covered in other types of equity
participation agreements.
Farm-out agreements
 When one Joint Venture partner assigns a portion of undivided interests in an
area to a newcomer or an existing partner, they use a “farm-out” agreement.
The party which assigns its rights is often referred as the “farmor” and the
recipient is called “farmer” or “farminee”. The assignment is generally made
in return for compensation, commonly paid via commitments to fund specific
work such as well drilling, but sometimes in cash. The farm-out may be signed
at any stage, from exploration to production, but host states may limit or
prohibit farm-outs for a period shortly after winning the bid. Whilst industry
practices vary considerably on terms and conditions of different farm-out
agreements, model farm-out agreements based on industry practice are
available through the AIPN. 
Unitization agreements

 Most licenses or petroleum agreements and national petroleum laws include provisions
for unitisation. Unitisation is the joint exploitation as a unit of a given field crossing the
borders of two license or contract areas awarded by the host country.
 Unitisation means joint operation and exploitation of an entire petroleum reservoir by
different licensees or other exploitation right holders in an integrated manner and is
governed by a unitisation agreement. Unitisation can be set up within a single state or
between states that share a land or maritime border.
 Unitisations of two licence or contract areas crossing the border of the two adjacent
host countries is called an international unitisation. They are more complex than the
national unitisation noted in this section as they combine multiple petroleum
agreements governed by different jurisdictions. They generally require the signing of a
treaty by the two countries.
 When the location of a petroleum reservoir coincides with an international border,
either state may order unitisation, since the principle of permanent sovereignty over
natural resources means states have exploitation rights within their own territory. The
UN Convention of the Law of the Sea (UNCLOS) establishes the principles for coastal
states’ sovereign rights to explore their territorial waters and seabed and exploit their
natural resources in the continental shelf. The Frigg agreements between the UK and
Norway are examples of inter-state unitisation agreements.
Petroleum agreements
 1.1 In this Agreement, unless the context otherwise requires:
 1.1.1 “Act” means the Petroleum (Exploration and Production) Act Chapter 150 of the Laws of
Uganda as amended and in effect from time to time.
 1.1.2 “Advisory Committee” means the Committee constituted pursuant to Article 5.
 1.1.3 “Affiliated Company” means any entity directly or indirectly effectively controlling or
effectively controlled by, or under direct or indirect effective common control with a specified
entity. For the purposes of this definition “Control”, when used with respect to any specified entity,
means the power to direct, administer and dictate policies of such entity (it being understood and
agreed that it is not necessary to own directly or indirectly fifty percent (50%) or more of such
entity’s voting securities to have control over such entity, but ownership, direct or indirect, of fifty
percent (50%) or more of such entity’s voting securities shall automatically indicate control), and the
terms “controlling” and “controlled” have meanings corresponding to the foregoing.
 1.1.4 “Agreement” means this instrument and the annexes attached hereto, including any
extensions, renewals or amendments thereof agreed to in writing by the Parties.
 1.1.5 “AlbertineGraben” means that geological entity within the Republic of Uganda together with
such contiguous area or areas of the Democratic Republic of Conga which together are known
collectively as the AlbertineGraben and recognised as such by the international geological
profession.
 1.1.6 “Allowable Contract Expenditures” means those expenditures as so described in Section 3 of
Annex “C”.
CONT
 1.1.7 “Appraisal Programme” means a programme carried out following one or more
Discovery(ies) of Petroleum for the purpose of delineating the Petroleum Reservoirs(s)
to which that discovery or these discoveries relate(s) in terms of thickness and lateral
extent and estimating the quantity of recoverable Petroleum therein.
 1.1.8 “Appraisal Well” means any Well drilled for purposes of an Appraisal
Programme.
 1.1.9 “Associated Gas” means Natural Gas which is produced in association with Crude
Oil, and includes solution gas or gas cap gas, from a Petroleum Reservoir recovered as
gas at the surface by separation or other primary field processes.
 1.1.10 “Barrel” means a quantity consisting of forty-two (42) United States gallons,
liquid measure, corrected to a temperature of sixty degrees (60) Fahrenheit.
 1.1.11 “Calendar Month” means any of the twelve (12) months of a Calendar Year.
 1.1.12 “Calendar Quarter” means a period of three (3) consecutive Calendar Months
commencing with first day of January, April, July or October of each Calendar Year.
CONT
 1.1.13 “Calendar Year” means a period of twelve (12) Calendar Months according to the Gregorian Calendar,
starting with January 1st and ending with December 31st.
 1.1.14 “Commercial Production” means production of Crude Oil or Natural Gas or both and delivery of the
same at the Delivery Point under a programme of regular production and sale.
 1.1.15 “Contract Area” means (a) on the Effective Date, the area described in Annex A and shown on the
map in Annex A; and (b) thereafter, the whole or any part of such area which, at any particular time,
remains subject to an Exploration Licence granted to Licensee pursuant to Article 3 and/or subject to a
Production Licence granted to Licensee pursuant to Article 7.
 1.1.16 “Contract Expenses” means Exploration Expenditures, Development and Production Expenditures and
Operating Expenses incurred by Licensee in Conducting Petroleum Operations hereunder determined in
accordance with the Accounting and Financial Procedure described in Annex “C”.
 1.1.17 “Contract Revenues” means the sum of all proceeds of sales of Petroleum and monetary equivalent to
the value of other dispositions of Licensee's share of Petroleum produced and saved and not used in
Petroleum Operations and any other proceeds from Petroleum Operations hereunder.
 1.1.18 “Contractor” means any person, company or entity employed by or on behalf of the Licensee for the
purpose of carrying out Petroleum Operations.
 1.1.19 “Sub-contractor” means any person, company or entity employed by or on behalf of a Contractor for
the purpose of carrying out Petroleum Operations.
 1.1.20 “Crude Oil” means any hydrocarbon which at atmospheric pressure and a temperature of between 60
Fahrenheit and 113Fahrenheit is in a liquid state at the wellhead or gas/oil separator or which is extracted
from Natural Gas in a plant, including distillate and condensate; and has been produced from the Contract
Area.
CONT
1.1.21 “Delivery Point” means the point at which Crude Oil passes through the
intake valve of the pipeline or tanker or truck or rail wagon at the terminal or
refinery in Uganda, or such other point which may be agreed to in writing by the
Parties. In respect of Natural Gas, the Delivery Point shall be such point as may
be agreed to in writing by the Parties.
1.1.22 “Development and Production Expenditures” means those expenditures as
so categorised in the Accounting and Financial Procedure described in Annex
“C”.
1.1.23 “Development Area” means an area constituted by a block that is, or by
blocks that are, subjected to a Petroleum Production Licence.
1.1.24 “Development Operations” has the meaning ascribed to it in the Act but
does not include operations beyond the Delivery Point.
1.1.25 “Development Plan” means a development plan referred to in Section 21
(3) of the Act.
1.1.26 “Discovery” means a discovery of Petroleum within the meaning of the
Act.
CONT
1.1.27 “Discovery Bonus” means a single, non-recoverable lump sum payment by
the Licensee to Government upon making a Discovery.
1.1.28 “Effective Date” means the date on which this Agreement is signed by all
Parties hereto.
1.1.29 “Exploration Licence” means the petroleum exploration licence referred to
in paragraph 3.1 and granted pursuant to Section 9 of the Act.
1.1.30 “Exploration Expenditures” are all necessary, appropriate and economical,
direct and allocated indirect costs incurred in the search for petroleum and
appraisal of Discoveries in the Contract Area as so categorised in the Accounting
and Financial Procedures described in Annex C.
1.1.31 “Exploration Period” means the Exploration Period referred to in paragraph
3.1.
1.1.32 “Exploration Well” means a Well, other than an Appraisal Well, drilled in
the course of Exploration Operations (as defined in the Act), conducted hereunder.
CONT
 1.1.33 “Good Oilfield Practices” means all of those things that are generally
accepted in the international petroleum industry as good, safe and efficient
in the carrying out of Exploration or, as the case may be, Development
Operations and that an experienced, reasonable and prudent operator,
engaged in a similar activity under similar circumstances elsewhere, would
use.
DELIVERY

Is formal and voluntary transfer of possession by actual(physical) delivery,

constructive delivery (by an agreement or understanding), or symbolic delivery
(by documents) also called presentation or presentment.
 Bulk Fuel Delivery Services from Atlas Oil
Petroleum products serve as the lifeblood of countless industries. Gas stations,
trucking fleets, construction and waste management companies are just a few of
the institutions that would grind to a halt without timely and consistent delivery
of gasoline and diesel fuel.
Atlas Oil understands that timely customer service, fuel quality, and price are
important factors to consider when choosing a bulk diesel fuel supplier.  With
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service and quality with a competitive price.
Distribution Terminals for Bulk Fuel Delivery

The Atlas advantage is apparent from day one. As a leading diesel fuel supplier,

our expansive nationwide network of fuel terminals allows us to deliver to forty-
nine states with unmatched speed and reliability. Atlas’ unmatched customer
service allows us to constantly grow, easily expanding our remote location
delivery network.  Our expertise, nationwide network of strategic partners and
regional operation hubs make sure customers’ complete fueling needs are
fulfilled.
Bulk Fuel Delivery with Cloud-Based Management

Atlas leads the industry in its usage of cloud-based fuel management and remote
inventory management. These cutting-edge applications help owners and
managers in keeping precise track of their inventory, giving them the information
they need to make the decisions that drive their business or operation.
GROSS INCOME

 Is the sum of all wages, salaries, profits, interest payments, rents and other
forms of earnings before any deductions or taxes. It is just the opposed of net
income.
 Gross income arising from a transfer of any property or right related to
petroleum business, if the total amount of such gross income is definitely
determinable; (5) Any other income arising from conducting petroleum
business.
MINING EXPLORATION EXPENDITURES
Definition

 Exploration expenditure comprises of the expenditure other than the

excluded expenditure which is incurred by a taxpayer in exploration for
petroleum in the eligible recovery or the exploration area in relation to the
petroleum project. Generally, if the scheme is an onshore petroleum project
or if the production license is granted after 30th June 2008, then the relevant
area for this purpose will be the entire exploration permit area till the time
the production license is granted. Once the production license is granted, the
relevant area includes only the production license area.
Meaning

 Exploration expenditures are also defined as the overheads which are earned
by a mining organization. It is used to express the quality and location of the
mineral deposits which was not exploited commercially before. The
characteristic of exploration expenditure is not determined by the fact that a
taxpayer holds an interest in a retention lease or an exploration permit, but it
is a question of fact which should be determined in light of all circumstances.
 As a general rule, exploration expenditures are recoverable and subjugated
through depletion. Generally, the taxpayers do have the option to deduct a
small percentage of the exploration expenses in the year in which they are
incurred and then recapture those expenses when the property is transferred
or when the production stage is reached. Exploration expenditures are
typically high risk investments which are essential for the existence and
growth of the mining industry.
Methods for recovering exploration expenditures

 The two possible methods for recovering exploration costs or expenditures

are:
 1) It may be recorded as income in the first year of production.
 2) It may be recovered by disallowing the depletion allowance until the cost is
recaptured.
 If the exploration expenditure is not included in income in the first producing
year, then they must be recaptured through the allowance for depletion. The
deduction for depletion will be disallowed until the recovery of the total
amount of depletion expenditures that has been expensed previously.
MINING EXTRACTION EXPENDITURE

 Is extraction of valuable minerals or other geological materials from the

Earth, usually from a mineralized package that is of economic interest to the
miner.
Mining Extraction Expenditure
 Mining has always been an environmentally disruptive activity, but
contemporary extractive industries are located in some of the most
ecologically sensitive forests in the boreal and the tropics. Oil, gas, and
mineral extraction account for an estimated 7% of global deforestation in the
subtropics, with increasing exploration and development taking place in the
Amazon and Congo basins. In more affluent countries, oil, gas, coal, and
mineral developments continue to degrade and pose threats to forests, such
as in the Canadian boreal and the Russian taiga, where oil transportation
infrastructure is being planned and developed. The development of tar sands
infrastructure in the Canadian boreal has resulted in the clearing and
degradation of over 750,000 ha of forested areas since the year 2000. 
CONT

Oil, coal, gas, and minerals extraction reduce forest cover, but also lead to more long
term impacts such as pollution, infrastructure development and increased human activity.
Extractive industries produce toxic water and chemicals as byproducts that can contaminate
groundwater and kill flora and fauna. Weak regulation in policy and practice has hindered
effective monitoring and accountability processes in developing countries. Even in advanced
economies like Canada or the United States, the development of oil pipelines always entails
risks of leakage, which can lead to surface contamination. Small-scale mining of gold is
responsible for 1/3 of the total mercury released into the environment, as mercury is used to
separate gold from its ores. Acid mine drainage methods, and tailings pools, which hold mine
waste products such as sediments and minerals, present further risks. The release of such
waste has disastrous consequences, as exemplified by the collapse of the tailings dam of
Ok Tedi mine in Papua New Guinea in 1984, which resulted in the deposition of copper-heavy
waste over 10,000 ha of forestland. The forest die-off has extended beyond this immediate
area over the course of 30 years, as mine waste continued to be discharged into the river
system. This type of pollution can impact entire ecosystems, as metals are cycled over long
time spans.  
CONT

 Some studies have shown that over 25% of metal mines worldwide can be
found within 10 km of a protected area’s boundaries. In some regions like the
Congo Basin, small-scale and artisanal mining takes place within protected
area boundaries. Land concessions to mining companies often overlap with
indigenous territories, such as in the Amazon, 15% of which is covered by
active or planned oil concessions and 8% of which is covered by minerals
extraction concessions. With the growth of fossil fuels and minerals extraction
in developing countries, the threat of pollution from oil spills and mining
waste will continue to rise. Increases in the prices of oil, gas, and minerals
are predicted to continue, spurring further growth of the extractive industries
in developing countries, in temperate, tropical, and boreal regions. Read
further about mineral extraction and mining in the Congo Basin and in the
boreal.
 PETROLEUM REVENUES
 Petroleum revenue as defined by the Act includes tax paid under the Income
Tax Act on income derived from petroleum operations, Government share of
production, signature bonus, surface rentals, royalties, proceeds from the
sale of Government share of production, any dividends due to Government,
proceeds from sale of oil.
 Oil wealth has come to be seen more often as a curse than as a blessing. This
paper covers principles, measures and techniques that might allow better
petroleum revenue management in future.
 Petroleum resource rent is the value of the product of a petroleum resource
minus all the necessary costs of production. A petroleum tax system with rent
as the tax base interferes least with pre-tax decisions on investment and
production. Competition in petroleum investment allows the “price” of a
resource to be identified and a tax system design to capture it. Stability in
fiscal terms reduces investor risk and allows states to tax more of the rent.
The petroleum tax system cannot move too far out of line with those
countries with similar prospectivity. It can be structured to reduce investor
risk and secure higher government revenue. A petroleum tax system can
differ from the general tax system and remain “neutral”. A petroleum fiscal
system can use production sharing, taxes and royalty or degrees of state
ownership each to equivalent fiscal effect. The broader the tax base the
better in each case.
 Flow of funds analysis helps to check that the fiscal system delivers what it
should. This and effective fiscal administration rely upon reconciliations of
flows at each point in the chain, supported by an audit strategy.
 Governments in petroleum economies seek to maximize revenue receipts and
then confront the consequences of uncertainty and instability in actual flows.
A revenue boom has somehow to be absorbed: by saving abroad, raising
imports, reducing savings or increasing investment. A slump requires the
reverse processes. Are there rules for keeping medium term stability in the
face of booms and slumps? First, keep spending within the sustainable growth
path and save excess revenues abroad. Second, use conservative (below
median) forecasts of future revenues. Third, allow the foreign asset position
to swing while keeping domestic absorption steady. If in doubt, save the
money.
 Permanent income means the amount of petroleum wealth that can be safely
consumed while maintaining financial wealth for future generations. Calculation
of permanent income offers a yardstick for sustainable petroleum revenue
management. It has political appeal in that its use shows a leadership concerned
about equity among generations.
 Special funds to store and manage petroleum revenues (non-renewable resource
funds or NRFs) may have three broad motives: stabilization, savings or
precautionary. The integration of any fund with overall fiscal management is vital.
There should be a consolidated budget framework (domestic expenditure only
through the budget), a liquidity constraint on the general budget (no borrowing
that offsets savings in the fund) and strict limits on domestic investment by the
fund. The timing of petroleum revenues does not follow a known path; fiscal
management, perhaps supported by a NRF, can shift the path of absorption and
reduce the effects of uncertainty.
 Hedging offers an alternative solution for the stabilization role of NRFs. A
futures strategy reduces price uncertainty without initial cost; an options
strategy operates like insurance and carries an initial premium cost. Because
these strategies require direct access to markets an over-the-counter (OTC)
arrangement with a financial institution may better suit developing country
governments; it could provide for longer-term instruments but with credit risk
to both parties. Hedging carries political difficulties, especially if spot prices
exceed the hedged prices. Institutional capacity for hedging may be weaker
than required. Over time hedging could form part of a revenue management
strategy and because companies engage in it anyway governments should
address the revenue consequences of private hedging.
 Hedging offers an alternative solution for the stabilization role of NRFs. A
futures strategy reduces price uncertainty without initial cost; an options
strategy operates like insurance and carries an initial premium cost. Because
these strategies require direct access to markets an over-the-counter (OTC)
arrangement with a financial institution may better suit developing country
governments; it could provide for longer-term instruments but with credit risk
to both parties. Hedging carries political difficulties, especially if spot prices
exceed the hedged prices. Institutional capacity for hedging may be weaker
than required. Over time hedging could form part of a revenue management
strategy and because companies engage in it anyway governments should
address the revenue consequences of private hedging.
 Petroleum revenues, like any other funds, need expenditure management
rules for effective use. These rules cover adequacy of data, budget
preparation, budget execution and cash management arrangements.
Earmarking for specific expenditures and disbursement through extra-
budgetary funds may, exceptionally, have a role but are usually best avoided.
In many countries, the balance between local (resource producing area) and
national distribution of petroleum revenues is highly sensitive. In appropriate
distributions can soon undermine the integrity of the fiscal system but a
programme for decentralization and revenue sharing is important.
Contractual arrangements between different levels of government over
specific resource developments offer a way forward.
 STAGES IN MINING
 Prospecting/Surveying
 The first stage in the mining process calls for skilled workers or AI to apply their
geological knowledge in identifying areas where a particular ore can be found.
There are two methods workers and machines can employ during this stage:
  
 Direct Method
 • Focuses solely on the examination of deposits found on or near the
surface.
 • Methods include: visual examination via microscopic study and video
prospecting.
 Indirect Method
 • Applied on deposits found deeper in the land.
 • Methods include: radiometric, seismic, and magnetic.
 Exploration
 In the second stage of mining, core samples are collected for the purpose of
evaluating the grade and weight of deposits. Diamond drills are used to obtain
samples.
 Once the reserve estimation—meaning, the value of the deposit—is
determined, a feasibility study must then be conducted to help determine
whether to abandon or develop the deposit.
 Mine-site Design/Planning
 Upon determining to work on the site, the designing and planning stage
begins. This process calls for the use of studies that help determine whether
the project is:
 • safe
 • socially responsible
 • environmentally sound
 • economically viable
 Development
This stage of the mining process requires establishing a path to the mineral deposit.
That path, however, requires more than excavation.
In order to even begin work, mining rights must be acquired, access roads must be
constructed to help workers navigate the site, and a power source must be
established.
 Production
Once these elements are obtained, the physical mining process—or, the first step of
production—begins. The mining process can be broken down into two categories:
 Surface Mining
Workers begin by striping the overburden, which is rock, soil, and ecosystem that lies
above the surface.
 Underground mining
 The digging of tunnels and sink shafts when the ore—or mineral deposit—is below
the surface. Hand tools such as chisels, hammers, and wedges are used to break
up waste rock, Sometimes, areas must even be blasted in order to loosen rock so
workers can more easily separate the ore from the waste rock—which are mined
separately.
 The next step, once the ore is excavated, is to separate the waste rock and ore
using primary crushers, located at the open pit mine site. At this point, larger
rocks are broken down to a size better suited for the conveyor belt to transport.
 From there, the ore is transported to a separate facility for smelting, which is:
 The process of melting the ore concentrate in a furnace to separate the metal.
Then, the ore is poured into molds to make bars of bullion.
 Closure/Reclamation
 Once the ore has been processed and shipped away for sale, the final step of the
mining process begins. The land which was used to obtain these resources must
be rehabilitated as much as possible. The objectives of this process include:
 • minimizing environmental effects
 • ensuring public health and safety
 • preserving water quality
 • establishing new landforms and vegetation
 • removing waste and hazardous material
 • stabilizing land to protect against erosion
 MINING OPERATIONS
 means every kind of work done on or in respect of the Property or the
Minerals derived from the Property during the Option Period by or under the
direction of the Optionee including, without limiting the generality of the
foregoing, the work of assessment, geophysical, geochemical and geological
surveys, studies and mapping, investigating, drilling, assaying, prospecting,
designing, examining, equipping, improving, surveying, shaft-sinking, raising,
cross-cutting and drifting, searching for, digging, trucking, sampling, working
and procuring minerals, ores and metals, surveying and bringing any mining
claims to lease or patent, reclaiming and all other work usually considered to
be prospecting, exploration, development, mining and reclamation work; in
paying wages and salaries of workers engaged in the work and in supplying
food, lodging, transportation and other reasonable needs of the workers;
 in paying assessments or premiums for workers' compensation insurance,
contributions for unemployment insurance or other pay allowances or benefits
customarily paid in the district to those workers; in paying rentals, licence
renewal fees, taxes and other governmental charges required to keep the
Property in good standing; in purchasing or renting plant, buildings,
machinery, tools, appliances, equipment or supplies and in installing,
erecting, detaching and removing them; mining, milling, concentrating,
rehabilitation, reclamation, and environmental protections and in the
management of any work which may be done on the Property or in any other
respect necessary for the due carrying out of the prospecting, exploration and
development work.
 Rehabilitation Expenditures
 Means any costs incurred for the physical construction involved in the
rehabilitation of an historic home, but excludes: (A) The owner's personal
labor, (B) the cost of site improvements, unless to provide building access to
persons with disabilities, (C) the cost of a new addition, except as may be
required to comply with any provision of the State Building Code or the State
Fire Safety Code, (D) any cost associated with the rehabilitation of an
outbuilding, unless such building contributes to the historical significance of
the historic home, and (E) any non-construction cost such as architectural
fees, legal fees and financing fees;
 RULES OF MINING
 Vision Zero And The 7 Golden Rules In Mining
 Your First Steps to Success in Prevention
 Section on Prevention in the Mining Industry
 Issa Mining – Who We Are
 ISSA Mining cares globally for safety, health and wellbeing in mining, connecting
stake- holders who are sharing passion, responsibility and professional interest in
occupational safety and health for mining. All mining enterprises, associations,
researchers and academics, governments and their agencies, trade unions,
suppliers and other stakeholders are invited partners. Whoever deals with the
safety, health and wellbeing of mine workers is a potential member of the ISSA
Mining community.
 Under the umbrella of the ISSA, the International Section on Prevention in the
Mining Industry, in short ISSA Mining, aims to bring forward social security in
mining, particularly in the field of prevention. By means of worldwide
cooperation, the not-for-profit organi- zation ISSA Mining aims to achieve
worldwide acceptable working, OSH and social condi- tions in mining
enterprises of all sizes – small businesses included! ISSA Mining is clearly
committed to the prevention strategy VISION ZERO, targeting a working
environment in which nobody is injured, killed or so severely injured or falls
ill that she or he suffers lifelong harm. VISION ZERO is the strategic backbone
of ISSA Mining’s work.
 With more than 100 members around the world and board members from five
continents, the independent organization ISSA Mining is a part of the global
network of the Interna- tional Social Security Association (ISSA),
headquartered in Geneva, Switzerland. ISSA Mining hosts and joins
international congresses and workshops focused on health and safety. Uniting
a vast array of stakeholders, mining companies and their economic situa- tion
stay in the focus while pursuing the ultimate goal: to protect the life and
health of every miner!
 Because Life Matters
 340 million accidents at work happen worldwide every year, only counting those leading to
more than four days absence. 360,000 end fatal. Two million people die every year due to
work-related diseases. To sum this up: around 2.4 million people die every year because
of unacceptable work conditions. Among many risky industries, mining stands out.
 Mining operations go along with a variety of hazards. Not only in large operations, as they
first come to mind, but also in the manifold small scale mines, with an estimated 13
million workers worldwide. Miners are exposed to all kinds of risks from nature, from
machinery and vehicles, from various substances such as dust, mercury and other chemi-
cals, while also dealing with poor ventilation, inadequate space and overexertion.
Fatalities, injuries with lifelong consequences and severe occupational diseases are unac-
ceptable; every miner has the right to return safely back home after work every day, with
no adverse effects to her or his health. At ISSA Mining, we are committed to the aim of
VISION ZERO. But how to reach this goal?
 At ISSA Mining, we had the privilege of talking to many mining stakeholders across the
world, many of them producing remarkable outcomes in safety and health. We extracted
what we believe to be the most successful elements, aligned them around what we called
the “7 Golden Rules for Safe and Healthy Mining” and introduced them at numerous
international congresses and workshops. The sound feedback we received showed us that
the need for solutions like these are vast, and the style matched the requirements of
mines perfectly. You will find the 7 Golden Rules in this brochure; please also refer to our
addi- tional media for further information on implementation in your company, in
particular also “Vision Zero – 7 Golden Rules for zero accidents and healthy work”, a guide
for employers and managers by the ISSA, which offers additional input and checklists.
 In June 2015, all thirteen prevention sections of the International Social Security Associa-
tion, in short the ISSA, decided to adapt the VISION ZERO prevention strategy and the “7
Golden Rules” as the harmonized tools to reach the aim of zero harm, in all sectors of
industry across the globe. We are very proud to say that it all started here, in mining,
together with you.
 What Vision Zero Means
 Being the basic prevention strategy of the ISSA, Vision Zero is the vision of a
world without occupational accidents and work-related diseases. Its highest
priority is to prevent fatal and serious work accidents and occupational
diseases. Vision Zero is the goal of a comprehensive culture of prevention.
 VISION ZERO is about nothing less than our life and health – our most valuable
asset. But not only that: it is also about the success of enterprises, efficient
production, and motivated, productive employees. Although it is sometimes
also called a vision or a philosophy, VISION ZERO is in fact a strategy for more
efficient prevention that is based on results and characterised by values.
 Issa ś Vision Zero Strategy
 Accidents at work and occupational diseases are neither determined by fate
nor unavoid- able – they always have causes. By introducing the VISION ZERO
strategy at workplaces, these causes can be eliminated and work-related
accidents, harm and occupational diseases can be prevented. Seven GOLDEN
RULES have been developed to establish this strategy successfully at
workplaces.
 The ISSA’s VISION ZERO strategy is flexible and can be adjusted to the specific
safety, health or well-being priorities for prevention in any given context.
Thanks to this flexi- bility, Vision Zero is beneficial to any workplace,
enterprise or industry in all regions of the world.
 Safety And Health Require Leadership
 Improving safety and health in the enterprise does not necessarily mean to
increase spending. More important is that the management acts with
awareness, leads consist- ently and builds a climate of trust and open
communication at every level in the company. Implementing the Vision Zero
prevention strategy requires the active contribution and participation of many
different actors at company level.
 One thing is clear: the success or failure of implementing the Vision Zero
strategy will ultimately be determined by dedicated employers and
executives, motivated managers and vigilant employees.
 7 Golden Rules for Vision Zero
 Golden Rule 1 Take leadership – demonstrate commitment
 Golden Rule 2 Identify hazards – control risks
 Golden Rule 3 Define targets – develop programmes
 Golden Rule 4 Ensure a safe and healthy system – be well-organized
 Golden Rule 5 Ensure safety and health in machines, equipment and
workplaces
 Golden Rule 6 Improve qualifications – develop competence
 Golden Rule 7 Invest in people – motivate by participation
 Invest in people –motivate by participation
 GOLDEN RULE 1
 TAKE LEADERSHIP – DEMONSTRATE COMMITMENT
 Be a leader – wave the flag! Your conduct as a leader is decisive for the success or failure
of safety and health in your company.
 Every employer, every executive and every manager is responsible for safety and health in
their enterprise. The quality of leadership not only determines how safety and health are
practiced in the enterprise, but also how attractive, successful and sustainable it will be.
Leadership demands open communication and a clear management culture. Good
leadership is exhibited for example by predictability, consistency and attentiveness.
 Executives and managers are role models: they lead by example. They establish the rules,
and they follow the rules. They make sure that everyone knows the rules and that they
are fol- lowed. Violations of the rules need to be addressed immediately – look at things!
Pointing out hazardous conditions is to be rewarded. What managers do, tolerate and
demand sets the standard for other employees.
 GOLDEN RULE 2
 IDENTIFY HAZARDS – CONTROL RISKS
 Risk assessment serves as the essential tool for the timely and systematic identi-
fication of hazards and risks and to implement preventive actions. Accidents,
injuries and near misses should also be evaluated.
 You are smart, you use risk assessment that helps you to identify hazards and risks
before accidents and production downtimes occur, and it assists you with evaluating
the risk potential as well as establishing and documenting the required protective
measures. That is why this tool is used around the world today.
 Properly done, a systematic risk assessment is ideal for practical instruction of
employ- ees in your enterprise. Evaluating occupational accidents, injuries and near
misses is important for identifying main focus points or potential improvements.
 GOLDEN RULE 3
 DEFINE TARGETS – DEVELOP PROGRAMMES
 Success in occupational safety and health requires clear goals and concrete steps for
implementation, which should be established in a programme.
 Occupational safety and health has many facets. Prioritize, establishing clear goals for OSH in
your enterprise and striving to implement them over the medium term – for example in a
three- year programme.
 There are several options for a goal-oriented, programme-based approach: Either you set a
goal to continuously reduce the number of accidents, or you establish themes to focus on –
 such as the operation of machines, the use of forklifts and personal protective equipment, or
the reduction of dust exposure. Once your employees recognize that their safety and health
is important to you personally and that something is being done in the enterprise, success
will not be long in coming. You should also communicate regularly about the achievement of
goals.
 GOLDEN RULE 4
 ENSURE A SAFE AND HEALTHY SYSTEM – BE WELL-ORGANIZED
 Systematically organizing occupational safety and health in your enterprise is a
good idea. It pays off and is easy.
 With well-organized occupational safety and health, every enterprise runs
more smoothly because disruptions, production downtime and quality problems
are reduced. These are all good reasons for you to make sure your OSH
organization is effective – it pays off!
 Checklists can help you. Those who want to do more should implement an OSH
management system that allows for continuous improvement. Once everything
is in place, a successful audit is rewarded with a certificate and recognition.
 GOLDEN RULE 5
 ENSURE SAFETY AND HEALTH IN MACHINES, EQUIPMENT AND WORKPLACES
 Safe production facilities, machines and workplaces are essential for working with- out
accidents. Health effects have to be considered as well.
 Effective occupational safety and health strategies include technical, organizational and
personal measures. Technical measures should take precedence. Therefore it is essential to
keep machines, facilities, equipment and also the workplaces up to current OSH standards, and
to also exclude or minimize detrimental effects on health. Naturally, it is not always possible to
use the latest technology.
 This is where retrofitting is required. Informing purchasing that safety comes first and that the
principle that safety equipment must be part of any activity has proven itself. It should be
borne in mind that most accidents occur in the course of troubleshooting, repairs or
maintenance because design and construction is often not applicable to these tasks and also
because safety devices are bypassed or fail to function. Preventing this is a management
responsibility.
 GOLDEN RULE 6
 IMPROVE QUALIFICATIONS – DEVELOP COMPETENCE
 Invest in the training and skills of your employees, and make sure that the required knowledge
is available at every workplace.
 After an accident one often asks: How could this happen? Technical facilities and produc- tion
machines are becoming increasingly productive and faster, but also more complex and prone to
malfunctions. This makes it all the more important to systematically deploy well qualified and
trained persons at the workplaces. It is a top management responsibil- ity to make sure that a
detailed description of the qualification requirements for every position in your enterprise has
been made and that every worker is able to perform the duties of his or her position.
 The workplace changes constantly. The half-life of knowledge is growing shorter and shorter,
and the skills of workers need to be refreshed at regular intervals. More than ever, providing
training and continuing education is a must, while leadership and man- agement need to be
learned too!
 GOLDEN RULE 7
 INVEST IN PEOPLE – MOTIVATE BY PARTICIPATION
 Motivate your staff by involving your employees in all safety and health matters. This investment pays
off!
 Motivating your employees to act in a safe and healthy manner is one of your most important leadership
responsibilities. Enterprises that show appreciation for their employees and also actively involve them in
safety and health within the enterprise are tapping into important potential: their knowledge, abilities
and ideas.
 When employees are consulted, for example while conducting the risk assessment or in the development
of operating instructions, their willingness to follow the rules is improved. Motiva- tion is promoted
through regular interactive events or awareness days where safety and health can be “lived” or
“experienced”. It costs nothing to praise employees for safe behaviour, ask them about their ideas, and
express interest in difficult work tasks and also to address unsafe actions or near misses immediately.
This can shape the personal attitude of the employees and motivate them to work safely and with
awareness and above all, confidence.
 The goal is for everyone to look after their colleagues as well as themselves – “one for all – all for one!”
 TAX ACCOUNTING PRINCIPLES
 Tax Accounting for An Individual
 For an individual taxpayer, tax accounting focuses solely on items such as
income, qualifying deductions, investment gains or losses, and other
transactions that affect the individual’s tax burden. This limits the amount of
information that is necessary for an individual to manage an annual tax
return, and while a tax accountant can be used by an individual, it is not a
legal requirement.
 Meanwhile, general accounting would involve the tracking of all funds coming
in and out of the persons' possession regardless of the purpose, including
personal expenses that have no tax implications.
 Tax Accounting for a Business
 From a business perspective, more information must be analyzed as part of
the tax accounting process. While the company’s earnings, or incoming funds,
must be tracked just as they are for the individual, there is an additional
level of complexity regarding any outgoing funds directed towards certain
business obligations. This can include funds directed towards specific business
expenses as well as funds directed towards shareholders.
 While it is also not required that a business use a tax accountant to perform
these duties, it is fairly common in larger organizations due to the complexity
of the records involved.
 Even legally tax-exempt organizations use tax accounting as they are required
to file annual returns.
 Tax Accounting for a Tax-Exempt Organization
 Even in instances where an organization is tax-exempt, tax accounting is
necessary. This is due to the fact that most organizations must file annual
returns.3 They must provide information regarding any incoming funds, such
as grants or donations, as well as how the funds are used during the
organization’s operation. This helps ensure that the organization adheres to
all laws and regulations governing the proper operation of a tax-exempt
entity.
 LIMITATIONS & DEDUCTION
 Three major challenges for the oil and gas industry are:
 Producing crude oil and refined products at a lower cost to stay competitive on
the market is one of the industry major challenges.
 Improving performance to ensure the valorization of assets
 To sustain supply of crude oil or gas, oil compagnies are looking to extend the
life of mature sites but are also compelled to seek new sources of oil or gas for
which extraction, transport and refining are much more complex and costly.
 Improving the environmental footprint to meet increasingly stringent standard
 The oil and gas industry is a major consumer of water and energy resources
and is therefore subject to increasingly stringent environment standard.