Audit under petroleum contracts

Course: Audit under petroleum contracts

We designed and delivered a five days training course on audits under petroleum contracts for the National Petroleum Authority of São Tomé and Principe (ANP-ST) in São Tomé, August 2019. The course was attended by officials from ANP-ST and other national institutions.

Production sharing agreements (PSA) and joint operating agreements (JOA) are two common categories of petroleum contracts under which a contractor (operator) will report costs which, in effect, will be partly covered by other parties, notably the host government and/or non-operating partners. The cost charges are regulated by accounting procedures which are annexed to the agreements. Audits undertaken by those other parties are an essential instrument for ensuring that the cost charges are correct.

The course covered the audit process including planning, identification of risks, interactions between auditor and auditee, review of documents and records from ERP (Enterprise Resource Planning) systems, management of audit exceptions and dispute resolution. The course drew on real-life examples (anonymized) with an emphasis of two areas which are prone to audit issues: Assignment of drilling costs with floating rigs, and allocation of indirect costs. The issues of exploration economics and transfer pricing were introduced.

For this course we teamed up with a Norwegian affiliate of the TMF Group ( which specializes in partner audits under Joint Operating Agreements. The course was delivered by Henrik Due Tønnessen from TMF and Erik Jarlsby from Eureka.

São Tomé is a nice place to go teaching ....