Production-Sharing Agreement (PSA) Arbitrations

In the extractive industries, production-sharing agreement (PSA) arbitration plays a central role in resolving disputes arising from long-term cooperation between foreign investors and host states in the oil and gas sector. Production-sharing agreements form the backbone of these relationships, and international arbitration is most commonly used to address disputes under such contracts.

First developed in Indonesia, PSAs have since become the global standard for petroleum exploration and production, gradually replacing traditional concession agreements that often involved extensive transfers of sovereign rights to private operators.¹

Against this backdrop, it is important to understand what PSAs are, why arbitration is central to their viability, and which arbitral doctrines most frequently shape PSA disputes.