Pure service contract

In a pure service contract, all exploration and production risks and rewards are retained by the state. The [international oil company (IOC)] is contracted to perform certain services (eg consulting, engineering, construction, operational, managerial services and so on), as defined by the agreement, in return for fee. The IOC is a mere contractor, working under the supervision of the state, and it has no legal or beneficial interest in the enterprise itself. This category of contracts includes management contracts (eg, contracts for management services, start-up and operational assistance and so on) and turnkey contracts (under which the contractor will be responsible for the construction and commissioning of a whole facility). Occasionally, the IOC may be given the right to buy back a proportion of production from the state, under separate sales arrangements.

– Geoffrey Picton-Turbervill (ed), Oil and gas: a practical handbook (Globe Law and Business, 2009), p38.