Service contract

The service contract is a regime under which the host state at all points retains full ownership of all the hydrocarbons being produced on its soil and the [international oil company] performs the exploration and production work as a service to the state. They have been adopted in countries with strong elements of nationalism, including those in which the constitution actually prohibits foreign control or ownership of natural resources, such as Saudi Arabia, Kuwait and Iran. These countries usually have substantial capital at their disposal, but seek the technical expertise of [international oil companies] to carry out the exploration and production activities.

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