SPLIT EPC CONTRACTS
One common variation on the basic EPC structure illustrated
above is a split EPC Contract. Under a split EPC Contract, the EPC
Contract is, as the name implies, split into two or more separate
contracts.
The basic split structure involves splitting the EPC Contract
into an Onshore Construction Contract and an Offshore Supply
Contract.
There are two main reasons for using a split contract. The first
is that it can result in a lower contract price since it allows the
contractor to make savings in relation to onshore taxes - in
particular, on indirect and corporate taxes in the onshore
jurisdiction. The second is that it may reduce the cost of
complying with local licensing regulations by having more of the
works, particularly the design works, undertaken offshore. In
addition, in some countries which impose restrictions on who can
carry out certain activities like engineering and design services,
splitting the EPC Contract can also be
