Not only is Libya infamous for being one of the most difficult countries in the Middle East where one can legislate, but it is also known for its rigorous negotiating tactics. In 1970, Libya was able to increase its share of profits (revenues) in its agreements with the IOCs to 55%, after putting the IOCs under pressure to reduce their share. In order to increase its share of royalties under IOCs oil and with the threat of nationalization of oil companies, Libya was able to move from the traditional concession agreement to a new contract on the basis of interest. Production-sharing agreements were first used in Bolivia in the early 1950s, although their first implementation was similar to that of today in Indonesia in the 1960s. [1] Today, they are often used in the Middle East and Central Asia. To invoke force majeure under Article 360 of the Libyan Civil Code and the judgments of the Libyan Supreme Court, three conditions must be met: (i) the event must be beyond the control of the parties, (ii) the event must be unpredictable at the time of the conclusion of the agreement and (iii) the execution of the undertaking must be absolutely impossible. In addition, Article 22.1 (apologies of Commitment) of the EPSA Agreement exempts part of its obligations if its non-compliance is attributed to “unforeseen circumstances and acts beyond the control of that party which renders its obligations impossible.” Teaching unforeseen events or circumstances requires that an event (i) be exceptional and unpredictable, (ii) that it is general in nature and (iii) that it occur during the performance of the contractual undertaking. Performance-based agreements, such as rsc berantai, focus more on production and valuation rates compared to production-sharing contracts, which are favoured by oil companies. The focus on optimizing production capacity in outlying areas can be extended to contracts for the recovery of major oil deposits in a rapidly comprehensive resource industry. Currently, Petronas` recovery factor for major oil deposits is about 26%, which can still be improved through the optimization of production techniques and the exchange of knowledge. [3] In production-sharing agreements, the country`s government entrusts the conduct of exploration and production activities to an oil company. The oil group supports the mineral and financial risk of the initiative and explores, develops and produces the field as needed. During the successful year, the company can use the money from the oil produced to recover capital and operating expenses known as “cost oil.” The rest of the money is called “profit oil” and is shared between the government and the company.

In most production allocation agreements, changes in international oil prices or the rate of production affect the company`s share of production.