BWP Production Sharing

8/12/2019 BWP Production Sharing

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SAPPRODUCTIONSHARINGACCOUNTING

SAP Functions in Detail

SAP for Oil & Gas


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INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

SITUATION ANALYSIS AND BUSINESS DRIVERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

SAP PSA BUSINESS BENEFITS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

MAJOR DESIGN CONSIDERATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6

FUNCTION DESCRIPTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6

MASTER DATA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7

Unit-of-Measure Conversion in a Combined Product . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7

SAP PSA CALCULATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7

Calculation Categories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7

Calculation Types . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8

Calculation Schemes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8

Sliding Scale Frequencies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9

DATA TRANSFER FROM AN SAP JVA SOURCE LEDGER TO AN SAP PSA LEDGER . . . 9

SAP PSA Ledgers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9

Planning Functions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9

DEFINING RULES FOR PSC COST DERIVATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10

PERIOD MANAGEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11

Authorizations for Data Entry . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11

DAILY VOLUME DATA ENTRY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11

Actual Production for Data Entry . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11

Daily Production Data Entry Transactions and Interfaces . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11

SPECIFYING THE FREQUENCY OF PRODUCTION VOLUME ENTRIES . . . . . . . . . . . . 12

REPORTING FREQUENCY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13

SAP PSA Calculation Processing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13

SAP PSA Calculation Processing with Multiple Venture and Equity Groups . . . . . . . . . . . . . . . 13

SAP PSA Calculation Processing with Combined Products . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14

Executing Actual Entitlement Calculations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14

TRANSFER FUNDS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15

ENTITLEMENT ADJUSTMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15

COST AND STOCK ADJUSTMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16

ADDITIONAL SAP PSA CALCULATION FEATURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16

SAP PSA REPORTING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17

INTERPRETING RESULTS OF SAP PSA CALCULATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . 18

SUMMARY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19

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CONTENTS


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As oil and gas exploration and development continues to

expand globally, international oil and gas companies are con-

stantly seeking out new reserves. Many untapped reserves are

under government ownership in various countries. In order to

explore and develop their reserves, governments enter into

production-sharing contracts (PSCs) with international oil and

gas companies, allowing them to maintain control and

ownership of their resources and ensure a fair return on the

production and sale of the products.

To comply with the terms of the PSC, the contractor must

maintain relevant accounting information, provide regular

reports to the government, pay royalties, and distribute the

appropriate share of costs and revenues.

SAP Production Sharing Accounting (SAP PSA) supports theserequirements for all parties that work under PCSs.

In SAP PSA, the fiscal relationship between a government and a

contractor is formalized in a PSC. The contractor operates the

project and pays royalties to the government, while the

government provides capital reimbursements. Both parties

then share the profits. The PSC usually specifies incentives for

the contractor, along with an acceptable return for both the

contractor and the government.

SAP developed SAP PSA in the late 1990s to meet the require-

ments of upstream oil and gas companies involved in PSCs. It

enables the contractor to effectively manage PSCs, plan budgets,

and project expected financial results.

You can use SAP PSA in conjunction with SAP Joint Venture

Accounting (SAP JVA). By using these key capabilities together,

the cost data (maintained in SAP JVA accounting ledgers) can

be used as the source cost data in SAP PSA, providing consis-

tent accounting.

SAP PSA automates the following processes: Recording and classifying costs Allocating production to government royalty and contractor

costs

Calculating profit shares and entitlements Reporting results

Figure 1: Production Sharing Contracts (PSCs)

Figure 1 illustrates the basic fiscal concepts of a typical PSC.

The governments royalty must first be deducted from total

production, making the remainder available for production

sharing between the government and contractor. However, the

contractor can use a portion of this production volume to

recover costs, such as capital expenses and operating expenses.

The unused volume is available for profit sharing, with the

contractor keeping a portion (called the contractor take). The

remaining profit belongs to the government.

INTRODUCTION

TotalProduction

TOTALPROFIT

COSTRECOVERY

Royality

GovernmentTake

ContractorTake

Operating

Development

Exploration

TotalAvailablefor

ProductionSharing Entitle-ment

Rent

CAPEX

OPEX


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SAP PSA BUSINESS BENEFITS

SAP PSA delivers the following business benefits:

Eliminates duplicate data entry and keying errors, byautomating roll-up of all cost data for all PSCs from SAP JVA

Provides efficient, accurate, and rapid processing of complexcalculations for multiple contracts and multiple products

within each contract

Eliminates manual tracking of costs for recovery, byautomatically carrying costs forward over multiple periods,

when necessary

Produces consistent reporting results, by synchronizing allcost and production volume data, regardless of the time it is

entered

Promotes efficient summarizing, by reporting aggregateresults for all products in a contract

Provides a planning, reporting, and decision-making tool to

forecast future costs, revenues, and profits

SITUATION ANALYSIS ANDBUSINESS DRIVERS

Differences in local government regulations affect the ability

and profitability of exploration and development activities.

Tighter government regulations mean that contractors must

be able to provide accurate and timely reports to government

authorities. Furthermore, a contractor must have tools to fore-

cast expected incomes, based on production estimates, prices,

and costs. The contractor can then, for example, use this infor-

mation to determine whether or not a project is worthwhile or

to specify optimum production levels.

SAP PSA ensures continuity in business processes, by providing

best business practices throughout all business processes. It also

reduces accounting administration, facilitates calculations of

financial information, and provides timely and accurate finan-

cial and operational data.

SAP PSA enables you to do the following:

Gather detailed operational data and convert it into powerful,timely business information

Reduce time and overhead required to manage PSCs Simplify the business processes required to account for PSCs Make informed decisions through the use of planning tools

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Figure 2 shows the flow of data through the various functions

of SAP PSA.

Figure 2: Functional Process Flow of SAP PSA

Based on industry requirements, the following are key design

features of SAP PSA:

Simple, intuitive, consistent, and common interfaces toreduce training time and increase proficiency

Flexibility to customize and personalize screens to suit

specific business needs

Maximum automation of business processes and datacapture to minimize manual input

Integration with SAP JVA and mySAP Financials to helpeliminate redundancy and data integrity issues

Flexible, sophisticated reporting capabilities

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MAJOR DESIGNCONSIDERATIONS FUNCTION DESCRIPTIONS

Ledger 4C

Ledger 4A

ActualItemsJVS01

PlanItemsJVP01

SummaryBalances

JVT01

PSAREPORTING

CYCLE

Direct CostAdjustment

Computation(Plan & Actual)

Revenues,Royalties,

Entitlement(Plan & Actual)

Production &Prices

(Plan & Actual)

Cost Roll Up(Plan & Actual)

MasterData

Roll UpRules

CumputationRules

Reporting

Process

Reports

Application Data In-/Output

Master Data Input

3

4

9

5

6

7

8

1

2

JVA Special Ledgers


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You can enter the production volumes and prices for each unit

in SAP PSA at appropriate intervals, ranging from daily to year-

ly. SAP PSA calculates revenue by multiplying the volume by

the price of each unit. It also automatically synchronizes pro-

duction volume with monthly cost data. Once the cost and

production volume data is in place for all PSCs, SAP PSA starts

the automatic calculations. It automatically apportions pro-

duction volumes to cover government royalties and all other

cost and profit categories.

Each PSC requires an SAP PSA calculation. If the recoverable

costs exceed the specified cost recovery cap, you can carry over

the excess costs to a subsequent accounting period. Alterna-

tively, you can transfer the excess costs to another PSC in the

same period. However, you can also accumulate excess profits

when the recoverable costs are less than the cost recovery cap.This excess profit must be shared by the contracting company

and the government.

You can also make unscheduled credit transfers between PSCs

to reduce excess profit and costs after performing an initial

calculation. In addition, SAP PSA generates a comprehensive

summary report that fulfills the contracting companys repor-

ting requirements allocating production volumes to costs

according to a PSC.

Contractors can use various calculation methods to determine

entitlements, profits, costs, gains and losses, and recoveries.

CALCULATION CATEGORIES

Each calculation category represents a standard class or group

of data that results from a typical production sharing calculati-

on.

SAP PSA calculates the amount for the data class (including

production, cost, and profit), based on a formula that is part of

the calculation category. SAP PSA performs calculations basedon the order in which the calculation categories are defined.

SAP PSA CALCULATIONS

Master data records in SAP PSA represent PSCs and the petro-

leum products specified within a PSC. SAP PSA uses a PSC and

product master records by assigning cost data to the records

within the ledger. The PSC and product are linked through

master data maintenance. All cost, volume, and revenue data

stored in SAP PSA is assigned to a combination of a PSC and a

product. SAP PSA master data maintenance and assignment

are handled by functions that support the following tasks:

Creating and linking SAP PSA master data Mapping SAP PSA master data to source system master data

Other master data records include terminal codes, ship codes,

PSC groups, PSA oil types, and PSA equity groups (as opposed

to JVA equity groups).

SAP PSA includes a lifting partner group, to which you canassign lifting partners, as required. SAP PSA uses the lifting

partner group to facilitate the splitting of lifting partner shares.

UNIT-OF-MEASURE CONVERSION IN A COMBINED

PRODUCT

To combine calculations for various products within a PSC,

you need a unit of measure for hypothetical, combined

product records. Because hypothetical or combined product

records include multiple products (which can have different

units of measure), the production volumes (entered for the

multiple products) are automatically converted into the unit

of measure assigned for the hypothetical or combined product

record. All units of measure involved must be based on the

same dimension either volume or length.

MASTER DATA


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Because some of the calculation categories depend on the

results of other calculation categories, it is best to define the

calculations in the same order as the corresponding keys (for

example, 1 = Production, 2 = Royalties, and so on). Production

is calculated even though it is not assigned.

CALCULATION TYPES

If a category needs to be subdivided for cost purposes, you can

assign calculation types to a category that specifies rules for

rolling up cost data from the source system to the SAP PSA

ledger. Calculation types also contain percentages that the

system applies to the base amount for volume, revenue, or

cost.

CALCULATION SCHEMES

SAP PSA calculation schemes contain percentages that are usedto determine various production sharing calculations. Depen-

ding on the type of calculation involved, calculation schemes

are based either on production volumes and prices or on costs

stored in the SAP PSA ledger.

The formulas in the calculation categories involve the

following types of functions:

Production volumes and revenues calculates grossrevenue by multiplying the volume for the period by the

price per unit.

Government royalty calculates a percentage of the resultsof the production volumes and revenues formula and

deducts that percentage from the results.

The cap or limit of the contractors recovery of costs calcu-lates a percentage of the production volumes and revenues

formula as the maximum cost to be recovered with revenues.

Actual costs selects data from the ledger and applies recov-ery rates for different types of costs.

Profit including excess profit adds excess profit to regularprofit, resulting in one number for profit. The system then

splits the profit between the contractor and the government,based on the percentage specified for each. This may apply in

certain instances, but it is not always enforced, because excess

profit could go to the contractor.

Profit excluding excess profit excludes excess profit fromprofit calculations, if the excess profits (above the actual costs

and less than the cost recovery cap) are going entirely to the

government.

Excess profit or excess cost carryforward is the gap

between the cost cap and the assigned costs. An excess profit

results if the costs are lower than the cost cap. If the costs are

higher than the cost cap, then the excess cost carryforward

function carries forward excess costs to the next accounting

period.

Other costs determines additional costs outside the normalsequence of calculating profit. This calculation category is

not included when calculating gross profit. It can be used,

for example, if the government advances a loan to a contrac-

tor.

Adjustments or transfers calculates funds that are manu-ally transferred, either from one PSC to another or withinthe same PSC, between different ventures or equity types.

Net excess profits deducts the amount resulting from theother costs formula and the adjustments or transfers formu-

la, from the amount calculated by the excess profit or excess

cost carryforward formula.

Production adjustments allows you to account for gains orlosses in production.

Gross entitlement provides a summation of calculationcategories. The split between the contractor and the govern-

ment is summed up (rather than calculated as a ratio).

Entitlement adjustments facilitates funds transfersbetween the contractor and the government, between the

government and partners, or between partners identified

within the PSC.

Net entitlement provides a summation for each partysshare, to show an adjusted net entitlement line with

percentage share.

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Details of the formulas are specified within calculation schemes,

which define the percentages that the system uses for various

calculations. Percentages are specified on a sliding scale basis.

You must assign calculation types and schemes for specific

combinations of PSCs and products. This assignment links the

percentages in the schemes to the formulas within the calcula-

tion categories.

SLIDING SCALE FREQUENCIES

You can specify percentages for PSC calculation schemes in

detail with the calculation scheme transaction. You can also

specify a sliding scale (range) of percentages. Each percentage is

applied to a production volume or value (threshold), based on

the amount of the production volume or value. Sliding scale

frequency is independent of volume frequency, so there is

complete flexibility of frequencies and units of measure. Also, arevenue-to-cost index factor can be used as a threshold.

When SAP JVA is the source ledger for an SAP PSA ledger, joint

ventures are assigned to the PSC. You can control data transfer

to the SAP PSA ledger by using validation rules that specify the

data that the system will roll up for specific combinations of

PSCs and products. Beginning with SAP R/3 4.6B, SAP PSA

only works together with SAP JVA. Activating SAP PSA involves

activating SAP PSA roll up and creating an SAP PSA document

number range.

SAP PSA LEDGERS

There are two sets of ledgers defined for SAP PSA: cost ledgers

4P and 4Q, and partner ledgers 4R and 4S. Each set can have

one or two physical ledgers capable of storing up to four cur-

rencies besides the transaction currency.

PLANNING FUNCTIONSTo fulfill government requirements, a variety of planning fun-

ctions are available in SAP PSA.

These functions allow you to:

Set up multiple versions of a cost plan Enter production, pricing, and partner entitlement data in a

cost plan

Copy cost plans and actuals as new plan versions Execute and reverse calculations of planned entitlement as

required

The first step in a periodic production sharing process involves

rolling up recoverable costs. PSC costs are rolled up from SAP

JVA to the SAP PSA ledger. The roll up can be done for both

actual costs and planned costs, which are originally planned in

SAP Controlling and then transferred to SAP JVA.

You can selectively roll up costs by using SAP JVA to map PSCs

to joint ventures and equity types. SAP JVA simultaneously

assigns calculation schemes to the costs, based on user-defined

criteria, such as product type or cost category. You can also dif-ferentiate between capital expenses and operating expenses.

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DATA TRANSFER FROM ANSAP JVA SOURCE LEDGER TOAN SAP PSA LEDGER


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Figure 3: PSA Roll Up from SAP Joint Venture Accounting

The rules for PSC cost derivation allow you to derive transac-

tional cost data from the source ledger for roll up to SAP PSA.

SAP PSA features sets that specify individual entries or ranges

of entries to be used as selection criteria in the rules used for

SAP PSA. These sets also select cost data for specific types of

cost calculation. Also, in addition to or instead of sets, rules

can be defined to transfer costs from SAP JVA to SAP PSA.

You can assign sets to the rules and create sets for cost data

selection in the SAP PSA rules transaction area. Usually, you

assign multiple sets (consisting of lists of basic sets) to a rule.

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DEFINING RULES FOR PSCCOST DERIVATION

Ledger 4C

Ledger 4A

ActualItemsJVS01

PlanItemsJVP01

JVA Special Ledgers

Ledger 4Q

Ledger 4P

ActualItems

JVPSC01A

PlanCosts

JVPSC01P

SummaryCosts

JVPSC01T

PSA Roll Up Ledgers

PSARoll Up

SummaryBalances

JVT01

Roll UpRules


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The open PSC periods transaction is available to specify the

periods of time that should be opened for a particular com-

pany code, to allow PSC transactions.

AUTHORIZATIONS FOR DATA ENTRY

SAP PSA includes authorization features that allow system

administrators to limit users access to SAP PSA transactions,

according to a particular set of fields, including the company

code field. With the use of company code and other relevant

fields in setting up SAP PSA authorizations, users from different

companies can use the same SAP PSA transactions, but will be

allowed to access only to their companys data within the

transactions.

You can enter SAP PSA volumes and populate the volume data

record table (T8PSA_INPUT), by using the following transac-

tions:

Actual production data entry

Daily production data entry transactions and interfaces

ACTUAL PRODUCTION DATA ENTRY

You can use this transaction to enter volumes and prices di-

rectly into the T8PSA_INPUT table. You can also enter adjust-

ments, as required, in this transaction. The SAP PSA calculati-

on retrieves the volumes and prices in the T8PSA_INPUT table.

The volumes are stored by:

Company code Version Year

Month PSC Product Venture Equity type Volume type, including production, production adjustment,

take or pay, and free gas

DAILY PRODUCTION DATA ENTRY TRANSACTIONS AND

INTERFACES

You can enter volumes, prices, and adjustments, by using the

following daily data entry transactions:

Maintaining prices defines pricing data. Maintaining lifting data by PSC captures cargo informa-

tion classified by property, which is assigned directly to a

company code and a PSC.

Maintaining production volumes defines production vol-umes and any gains or losses attributable to storage or trans-

portation.

Maintaining adjustments defines adjustments to produc-tion data and any gains or losses attributable to storage or

transportation. Maintaining pricing by terminal supports the entry ofpricing for a particular terminal.

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PERIOD MANAGEMENT DAILY VOLUME DATA ENTRY


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Maintaining lifting data by terminal captures cargo infor-mation classified by a terminal that is either associated with a

company code or independent of a company code.

Maintaining weighted average price establishes thefrequency with which the system calculates the selling price

for a particular company code, PSC, and product combina-

tion.

Maintaining weighted average price for arms-lengthsales allows users to maintain a monthly average price for

arms-length sales.

Arms-length/non-arms-length definition specifiesindustries that are physically close to the production (arms-

length) and industries that are further away (non-arms-

length).

COEP% for production interface is used to split the lifting

defined by the terminal for all involved PSCs and partners. Split lifting by PSC is used to update the company code

and PSC of lifting data entered for a company code-

independent terminal.

After daily data is entered, you use an interface transaction

to update monthly data with the daily data that was entered.

The interface carries out calculations for volumes, prices, sales

splits, and lifting data.

A frequency specifies how often production volumes must be

entered into the system. The following frequencies are available:

Daily average by month Daily average by quarter

Monthly

Quarterly Semiannually Annually

The production volume entry function specifies how often

production volumes must be entered in SAP PSA. This interval

must be equal to or less than the reporting frequency specified

for the PSC.

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SPECIFYING THE FREQUENCYOF PRODUCTION VOLUMEENTRIES


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You use the reporting frequency function to specify the

frequency of SAP PSA calculations monthly, quarterly, bian-

nually, or annually. The system can execute the SAP PSA cal-

culation process only for the frequency specified in the PSC

master data. If the reporting frequency for the PSC is specified

as monthly, then the system can execute the SAP PSA calcula-

tion process for any single accounting period.

The SAP PSA calculation processing with PSC groups function

allows a PSC to stipulate the following: When the costs of a

particular PSC that is within a group of PSCs exceed the cost

recovery cap, the excessive costs are transferred in the current

period to a producing PSC in the same group.

Only one PSC in a group of PSCs can be designated as produ-

cing. In contrast, for PSCs that are not in a group and that

have costs that exceed the cost recovery cap, the excessive costs

are transferred from the current period to the following period.

SAP PSA CALCULATION PROCESSING WITH MULTIPLE

VENTURE AND EQUITY GROUPS

In SAP PSA, a PSC can contain multiple venture and equity

groups, because multiple venture and equity groups can be

assigned to a single PSC in a single period. Depending on theparameters, the calculation is performed either by PSC or by

equity group. By default, the calculation and reporting is per-

formed based on equity group level. If you choose to perform

the calculation by PSC level, the report is broken down by

equity group. However, since all sliding scale definitions are on

a PSC level, the calculation uses the threshold based on the

PSC level, but applied to the equity group level.

Figure 4 shows an example of an SAP PSA calculation for one

PSC and one equity group.

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REPORTING FREQUENCYSAP PSA CALCULATIONPROCESSING


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Figure 4: SAP PSA Calculation by Equity Group and PSC

To process multiple venture and equity groups, the system

evaluates volumes or revenues for a PSC while considering the

rates that should be applied for certain costs. When multiple

venture and equity groups for a PSC are involved in calculation

processing, the total volume or revenue for that PSC is ad-

justed to the volume or revenue for each joint venture and

equity group. The system uses the adjusted volume or revenue

of the PSC to determine the rates to be applied to the adjusted

volume for each joint venture and equity group involved in

processing.

SAP PSA CALCULATION PROCESSING WITH

COMBINED PRODUCTS

In SAP PSA, combined products aggregate calculation results

for all the products assigned to a combined product. You can

enter combined products in the system by using the Create

SAP PSA Products transaction, just as you do for real prod-

ucts. When you assign a combined product to a PSC, the confi-

guration settings of the calculation schemes and types ensure

that costs are rolled up to the combined product.

14

Further, within the same PSC, you can assign single products

(that is, products not assigned to a combined product), in addi-

tion to combined products (including the assigned products).

EXECUTING ACTUAL ENTITLEMENT CALCULATIONS

You use this transaction to execute calculation processing of

actual entitlement and to review the resulting SAP PSA entitle-

ment report. This report includes the production volumes,

organized by calculation categories, and the corresponding

breakout by government and contractor shares.


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The entitlement adjustment feature in SAP PSA allows you to

transfer funds within one PSC from:

Contractor to government Government to contractor

Partner to government

Partner to partner

An entitlement adjustment involves forwarding a credit

amount from one participant in the PSC to another. Entitle-

ment adjustments are used to change the regularly calculated

split between the contractors (partners) and the government.

You can also reverse an entitlement adjustment, if required. Re-

versing an adjustment involves executing two transfer reversals,

one for the receiver record and one for the sender transfer

record.

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ENTITLEMENT ADJUSTMENTS

The transfer funds feature in SAP PSA allows you to transfer

funds from one PSC to another. It also enables you to transfer

between different ventures and equity groups or products

within the same PSC, as required. This feature is distinct from

the automated roll up of costs from the source ledger. The

transfer involves forwarding a credit amount from one PSC to

another.

You would ordinarily use the transfer funds feature after initial

calculations reveal excess profit in one PSC and a cost carry-

forward condition in another PSC.

Further, reversing a transfer is possible if required. Reversing a

transfer involves executing two transfer reversals, one for the

receiver record and one for the sender transfer record. This

reversal must take place before the calculation has been posted.

TRANSFER FUNDS


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In addition to the basic functions required to support the mini-

mum reporting requirements of PSCs, SAP PSA offers the fol-

lowing enhanced features that streamline and further auto-

mate the reporting process:

Multiple products are possible for each SAP PSA contract.

Multiple source ledger master data objects can be mapped toa single PSC and product combination, with cost roll up, fol-

lowing this mapping.

Aggregate calculation results can be produced for all prod-ucts in a PSC.

Multiple calculation and reporting frequencies are support-ed, including reporting monthly, quarterly, semiannually,

and annually.

Expenses that exceed the amount of recovery allowed for aperiod can be automatically carried forward to the next peri-

od in the same PSC or can be carried over to another PSC inthe same period.

Production that exceeds actual costs for the period, but thatfalls short of the maximum amount of recovery allowed for

the period, can be apportioned in various ways, depending

on customization.

Additional line items (other than rolled-up costs) can beaccommodated.

Manual transfers of credits between PSCs can be posteddirectly.

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ADDITIONAL SAP PSACALCULATION FEATURES

SAP PSA also features cost adjustment functions that support

the processing of contractor entitlements, as well as stock

adjustment functions that facilitate stock transfers between

PSCs and stock swaps across PSCs and a crude stream. Further-

more, stock adjustment functions include restatements of

prior-year PSC accounts and reason codes that identify why an

adjustment is made.

COST AND STOCKADJUSTMENTS


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Various SAP PSA reports are available to review the results of

PSA processing and to meet your reporting needs, including:

PSA print entitlement report displays the actualentitlement calculation that was previously executed (see

Figure 5a).

Document displaying by period displays results, accordingto the documents that were created and posted.

JV partner entitlement displays the entitlement of eachpartner that is a contractor for a PSC or a group of PSCs (see

Figure 5b).

Statement of storage entitlement displays total stock enti-tlement for the government and each of the partners, as well

as stock adjustments and stock swap or transfer amounts

(see Figure 5c).

PSC master data displays an overview of PSC master data.

Production data with adjustments displays an overview ofproduction data with corresponding adjustment amounts. Lifting data displays lifting data, including products and

partners involved, the volume, and the lifting date.

Flat prices report provides details about prices per unit andcorresponding periods.

Adjustments provides an overview of adjustments toproduction volumes.

Partner list report provides an overview of actual orplanned quantities or amounts calculated for a particular

partner, PSC, and product combination.

Displaying ledger summary displays ledger cost data.

Figures 5a, 5b, and 5c show sample reports you can create in

SAP PSA:

Figure 5a: Example of an SAP PSA Entitlement Report for One PSC

Figure 5b: Example of an SAP PSA Joint Venture Partner Entitlement Reportfor One PSC, Venture, and Product

SAP PSA REPORTING


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You can interpret the results of SAP PSA calculations by using

the following transactions:

Production data entry transactionThe production data entry transaction allows you to review

production volumes and revenues, which are critical for exe-

cuting SAP PSA calculations. With this transaction, you can

review volumes and prices per unit for specific PSC and pro-

duct combinations for particular accounting periods and fis-

cal years.

Display ledger summary transactionThe display ledger summary transaction allows you to

review cost data, which is also critical for executing SAP PSA

calculations. With this transaction, you can review the PSC

standard ledger, which stores cost data that was rolled upfrom the source ledger to the SAP PSA ledger. If there is an

amount by which actual costs exceed the cost recovery cap

for the current period, the ledger reflects a credit for that

amount to the PSC and product for the current period. The

ledger also reflects a debit for the same amount for the next

period, enabling the system to apply that amount against the

cap during calculation processing in the next period.

Data browser transactionAfter the system executes the SAP PSA calculations, the

PSCHD, PSCIT, and PSCCR tables are updated with different

aspects of the results. To fully interpret the results of calcula-

tion processing, you can review these tables using the stan-

dard Data Browser available in the ABAP Workbench Tools.

INTERPRETING RESULTS OFSAP PSA CALCULATIONS

Figure 5c: Example of an SAP PSA Storage Entitlement Report for One PSC,by Product Breakdown

A ledger summary (ledger 4P) is available to provide details

about cost and cost recovery records in a venture. The ledger

summary stores cost data that was rolled up from the source

ledger to the SAP PSA ledger.

A second ledger summary (ledger 4R) is available to provide

details about the figures stored within the calculation process

on the calculation type and partner level.


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SAP PSA is a key capability of the SAP for Oil & Gas industry

portfolio. By reporting on government royalties, contractor

costs and recovery tracking, and profit allocation, SAP PSA

delivers a single, integrated solution for upstream companies

involved in production sharing.

For more information please contact us at:

SAP AG

Neurottstrasse 16

69190 Walldorf

Germany

Mailing address:

69189 Walldorf

Germany

SAP information service:

Tel. +49-180-5343424Fax +49-180-5343420

http://www.sap.com

SUMMARY


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www.sap.com/contactsap

Documents

BWP Production Sharing