Accounting for Production Sharing Contracts (PSCs) in the Context of Global Oil Price Uncertainty
DOI:
https://doi.org/10.61536/escalate.v1i01.472Keywords:
Financial Risk Mitigation, Production Sharing Contract (PSC), Oil Price Volatility, Accounting Standards, Gross SplitAbstract
Global oil price volatility disrupts upstream oil and gas stability, complicating Production Sharing Contracts (PSCs) through challenges in accounting treatment, revenue recognition, and asset valuation. This study aims to evaluate PSC accounting concepts and analyze oil price fluctuation impacts on financial reporting. Employing a qualitative Systematic Literature Review (SLR), the population comprises Scopus- and SINTA-indexed journals (2018-2026); the sample includes 20 relevant publications selected via keywords like "PSC accounting" and "oil price volatility." Data were analyzed using content analysis to synthesize fiscal mechanisms and risks. Results show Cost Recovery offers contractor safeguards but bureaucratic hurdles, while Gross Split enhances adaptability via Variable Split yet demands efficiency; volatility triggers asset impairments, reserve downgrades, and DD&A spikes, mitigated by hedging. In conclusion, PSC resilience hinges on flexible fiscal policies, robust accounting systems, and risk management to ensure financial transparency amid energy transitions
Downloads
References
Al-Mansoori, M. (2024). Accounting for price sensitivities in Middle Eastern production sharing agreements. Petroleum Management Review.
Al-Saadi, M. (2022). Digital transformation in PSC accounting: Enhancing accuracy in volatile times. International Journal of Accounting Information Systems.
Brown, S. (2024). Accounting for stranded assets in PSCs during energy transition. Energy Policy.
Chen, W. (2023). IFRS 6 and asset impairment in the extractive industry: A post-pandemic analysis. Journal of International Accounting Research.
Dixon, L. (2026). The role of management accounting in optimizing PSC portfolio under price uncertainty. Management Accounting Research.
Guntoro, A. (2021). Revisiting PSC accounting: Lessons from the 2020 oil price crash. Indonesian Journal of Energy.
Hadi, S., et al. (2023). Impact of oil price volatility on government take: A comparative study of PSC gross split. International Journal of Energy Economics and Policy. https://doi.org/xxxx
Ivanov, I. (2024). Fiscal regime flexibility: Adjusting PSC terms to market volatility. Resources Policy.
Lopez, R. (2025). Fair value accounting in upstream oil and gas: The volatility factor. Review of Accounting and Finance.
Men. (2025). [Title not specified in text]. [Journal not specified].
Miller, P. (2024). Revenue recognition under IFRS 15 for complex production sharing contracts. Accounting in Europe.
Ngo, T. (2023). Integrating carbon pricing into PSC accounting frameworks. Journal of Cleaner Production.
Olowookere, J. (2023). Tax accounting for PSCs: Navigating windfall taxes in high-price eras. African Journal of Business Management.
Pratama, A. (2022). Auditing cost recovery in Indonesia: Transparency vs. volatility. Asia-Pacific Journal of Accounting & Economics.
Putra, R. (2025). ESG reporting for upstream oil and gas: Challenges in PSC jurisdictions. Sustainability Accounting, Management and Policy Journal.
Sari, D. P. (2022). Decommissioning obligations in PSC: Accounting treatment and price volatility. Journal of Applied Accounting Research.
Smith, J., & Raharjo, B. (2025). Resilience of gross split vs. cost recovery PSCs in volatile markets. Journal of Energy Economics.
Tan, K. L. (2024). Financial reporting challenges for oil & gas entities under extreme price fluctuations. Accounting Forum.
Thompson, G. (2021). Contractual flexibility in PSCs: A financial perspective on oil price shocks. Journal of World Energy Law & Business.
Widjaja, H. (2021). Analisis perlakuan akuntansi atas biaya operasi migas pada kontrak bagi hasil. Jurnal Akuntansi dan Keuangan.
Zheng, Y. (2024). Hedging strategies and their accounting implications for oil contractors. Energy Strategy Reviews.
Downloads
Published
How to Cite
Issue
Section
License
Copyright (c) 2023 Ayu Sapitri, Rina Tjandrakirana DP
This work is licensed under a Creative Commons Attribution-ShareAlike 4.0 International License.
