Publication Details
Abstract
Production sharing agreements (PSAs) combine the allocation of petroleum production with contract-specific rules for recovering eligible project costs. This study examines the social and financial mechanisms through which the interests of the state and investors can be coordinated in oil and gas projects implemented under PSAs in Uzbekistan. The research applies doctrinal legal analysis, comparative literature review, and qualitative economic analysis to the current PSA and tax framework, with legal sources verified as of 11 September 2026. The findings show that social expenditures should not become recoverable merely because they have a social purpose; their treatment should be assessed against three cumulative criteria: social necessity, economic justification, and a clear contractual basis. Where the statutory general social-tax rate is applicable, PSA documentation should specify the payer, tax base, accounting, reporting, and recoverable-cost status rather than attempt to create or replace the tax rule itself. Voluntary medical insurance may be treated as a project cost only where its necessity and contractual recoverability are demonstrable. The study also develops a proportional mechanism for protecting operator-funded investment in local workforce training while preserving an employee’s freedom to terminate employment. The proposed framework strengthens cost predictability, reduces later disputes over cost recovery, and links social protection and human-capital development to the financial logic of PSA projects without expanding contractual obligations beyond what is economically and legally justified.