SAP Functions in Detail

SAP for Oil & Gas

SAP
PRODUCTION
SHARING
ACCOUNTING

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CONTENTS
INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
SITUATION ANALYSIS AND BUSINESS DRIVERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
SAP PSA BUSINESS BENEFITS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
MAJOR DESIGN CONSIDERATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
FUNCTION DESCRIPTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
MASTER DATA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Unit-of-Measure Conversion in a Combined Product . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
SAP PSA CALCULATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Calculation Categories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Calculation Types . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Calculation Schemes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Sliding Scale Frequencies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
DATA TRANSFER FROM AN SAP JVA SOURCE LEDGER TO AN SAP PSA LEDGER . . . 9
SAP PSA Ledgers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Planning Functions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
DEFINING RULES FOR PSC COST DERIVATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
PERIOD MANAGEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Authorizations for Data Entry . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
DAILY VOLUME DATA ENTRY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Actual Production for Data Entry . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Daily Production Data Entry Transactions and Interfaces . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
SPECIFYING THE FREQUENCY OF PRODUCTION VOLUME ENTRIES . . . . . . . . . . . . 12
REPORTING FREQUENCY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
SAP PSA Calculation Processing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
SAP PSA Calculation Processing with Multiple Venture and Equity Groups . . . . . . . . . . . . . . . 13
SAP PSA Calculation Processing with Combined Products . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Executing Actual Entitlement Calculations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
TRANSFER FUNDS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
ENTITLEMENT ADJUSTMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
COST AND STOCK ADJUSTMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
ADDITIONAL SAP PSA CALCULATION FEATURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
SAP PSA REPORTING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
INTERPRETING RESULTS OF SAP PSA CALCULATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . 18
SUMMARY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
3

INTRODUCTION
As oil and gas exploration and development continues to
expand globally, international oil and gas companies are constantly seeking out new reserves. Many untapped reserves are
under government ownership in various countries. In order to
explore and develop their reserves, governments enter into
production-sharing contracts (PSCs) with international oil and
gas companies, allowing them to maintain control and
ownership of their resources and ensure a fair return on the
production and sale of the products.

Calculating profit shares and entitlements

Reporting results
Royality

Government
Take

Contractor
Take

To comply with the terms of the PSC, the contractor must

maintain relevant accounting information, provide regular
reports to the government, pay royalties, and distribute the
appropriate share of costs and revenues.
SAP Production Sharing Accounting (SAP PSA) supports these
requirements for all parties that work under PCSs.
In SAP PSA, the fiscal relationship between a government and a
contractor is formalized in a PSC. The contractor operates the
project and pays royalties to the government, while the
government provides capital reimbursements. Both parties
then share the profits. The PSC usually specifies incentives for
the contractor, along with an acceptable return for both the
contractor and the government.
SAP developed SAP PSA in the late 1990s to meet the requirements of upstream oil and gas companies involved in PSCs. It
enables the contractor to effectively manage PSCs, plan budgets,
and project expected financial results.
You can use SAP PSA in conjunction with SAP Joint Venture
Accounting (SAP JVA). By using these key capabilities together,
the cost data (maintained in SAP JVA accounting ledgers) can
be used as the source cost data in SAP PSA, providing consistent accounting.
SAP PSA automates the following processes:
Recording and classifying costs
Allocating production to government royalty and contractor
costs

TOTAL
PROFIT

Rent

Operating
OPEX

Total
Production

Total
Available
for
Production
Sharing

Development

Entitlement

COST
RECOVERY

Exploration
CAPEX

Figure 1: Production Sharing Contracts (PSCs)

Figure 1 illustrates the basic fiscal concepts of a typical PSC.

The governments royalty must first be deducted from total
production, making the remainder available for production
sharing between the government and contractor. However, the
contractor can use a portion of this production volume to
recover costs, such as capital expenses and operating expenses.
The unused volume is available for profit sharing, with the
contractor keeping a portion (called the contractor take). The
remaining profit belongs to the government.

SITUATION ANALYSIS AND

BUSINESS DRIVERS
Differences in local government regulations affect the ability
and profitability of exploration and development activities.
Tighter government regulations mean that contractors must
be able to provide accurate and timely reports to government
authorities. Furthermore, a contractor must have tools to forecast expected incomes, based on production estimates, prices,
and costs. The contractor can then, for example, use this information to determine whether or not a project is worthwhile or
to specify optimum production levels.
SAP PSA ensures continuity in business processes, by providing
best business practices throughout all business processes. It also
reduces accounting administration, facilitates calculations of
financial information, and provides timely and accurate financial and operational data.

SAP PSA BUSINESS BENEFITS

SAP PSA delivers the following business benefits:
Eliminates duplicate data entry and keying errors, by
automating roll-up of all cost data for all PSCs from SAP JVA
Provides efficient, accurate, and rapid processing of complex
calculations for multiple contracts and multiple products
within each contract
Eliminates manual tracking of costs for recovery, by
automatically carrying costs forward over multiple periods,
when necessary
Produces consistent reporting results, by synchronizing all
cost and production volume data, regardless of the time it is
entered
Promotes efficient summarizing, by reporting aggregate
results for all products in a contract
Provides a planning, reporting, and decision-making tool to
forecast future costs, revenues, and profits

SAP PSA enables you to do the following:

Gather detailed operational data and convert it into powerful,
timely business information
Reduce time and overhead required to manage PSCs
Simplify the business processes required to account for PSCs
Make informed decisions through the use of planning tools

MAJOR DESIGN
CONSIDERATIONS
Based on industry requirements, the following are key design
features of SAP PSA:
Simple, intuitive, consistent, and common interfaces to
reduce training time and increase proficiency
Flexibility to customize and personalize screens to suit
specific business needs
Maximum automation of business processes and data
capture to minimize manual input
Integration with SAP JVA and mySAP Financials to help
eliminate redundancy and data integrity issues
Flexible, sophisticated reporting capabilities

FUNCTION DESCRIPTIONS
Figure 2 shows the flow of data through the various functions
of SAP PSA.

Process

JVA Special Ledgers

Master Data Input

Summary
Balances
JVT01
Actual
Items
JVS01

Application Data In-/Output

Reports

Plan
Items
JVP01

Ledger 4A
Ledger 4C

Cumputation
Rules

4
Production &
Prices
(Plan & Actual)

Direct Cost
Adjustment

Computation
(Plan & Actual)

3
Cost Roll Up
(Plan & Actual)

PSA
REPORTING
CYCLE

Roll Up
Rules

Revenues,
Royalties,
Entitlement
(Plan & Actual)

Reporting

Master
Data

Figure 2: Functional Process Flow of SAP PSA

MASTER DATA

SAP PSA CALCULATIONS

Master data records in SAP PSA represent PSCs and the petroleum products specified within a PSC. SAP PSA uses a PSC and
product master records by assigning cost data to the records
within the ledger. The PSC and product are linked through
master data maintenance. All cost, volume, and revenue data
stored in SAP PSA is assigned to a combination of a PSC and a
product. SAP PSA master data maintenance and assignment
are handled by functions that support the following tasks:
Creating and linking SAP PSA master data
Mapping SAP PSA master data to source system master data

You can enter the production volumes and prices for each unit
in SAP PSA at appropriate intervals, ranging from daily to yearly. SAP PSA calculates revenue by multiplying the volume by
the price of each unit. It also automatically synchronizes production volume with monthly cost data. Once the cost and
production volume data is in place for all PSCs, SAP PSA starts
the automatic calculations. It automatically apportions production volumes to cover government royalties and all other
cost and profit categories.

Other master data records include terminal codes, ship codes,

PSC groups, PSA oil types, and PSA equity groups (as opposed
to JVA equity groups).
SAP PSA includes a lifting partner group, to which you can
assign lifting partners, as required. SAP PSA uses the lifting
partner group to facilitate the splitting of lifting partner shares.
UNIT-OF-MEASURE CONVERSION IN A COMBINED
PRODUCT

To combine calculations for various products within a PSC,

you need a unit of measure for hypothetical, combined
product records. Because hypothetical or combined product
records include multiple products (which can have different
units of measure), the production volumes (entered for the
multiple products) are automatically converted into the unit
of measure assigned for the hypothetical or combined product
record. All units of measure involved must be based on the
same dimension either volume or length.

Each PSC requires an SAP PSA calculation. If the recoverable

costs exceed the specified cost recovery cap, you can carry over
the excess costs to a subsequent accounting period. Alternatively, you can transfer the excess costs to another PSC in the
same period. However, you can also accumulate excess profits
when the recoverable costs are less than the cost recovery cap.
This excess profit must be shared by the contracting company
and the government.
You can also make unscheduled credit transfers between PSCs
to reduce excess profit and costs after performing an initial
calculation. In addition, SAP PSA generates a comprehensive
summary report that fulfills the contracting companys reporting requirements allocating production volumes to costs
according to a PSC.
Contractors can use various calculation methods to determine
entitlements, profits, costs, gains and losses, and recoveries.
CALCULATION CATEGORIES

Each calculation category represents a standard class or group

of data that results from a typical production sharing calculation.
SAP PSA calculates the amount for the data class (including
production, cost, and profit), based on a formula that is part of
the calculation category. SAP PSA performs calculations based
on the order in which the calculation categories are defined.

Because some of the calculation categories depend on the

results of other calculation categories, it is best to define the
calculations in the same order as the corresponding keys (for
example, 1 = Production, 2 = Royalties, and so on). Production
is calculated even though it is not assigned.
CALCULATION TYPES

If a category needs to be subdivided for cost purposes, you can

assign calculation types to a category that specifies rules for
rolling up cost data from the source system to the SAP PSA
ledger. Calculation types also contain percentages that the
system applies to the base amount for volume, revenue, or
cost.
CALCULATION SCHEMES

SAP PSA calculation schemes contain percentages that are used

to determine various production sharing calculations. Depending on the type of calculation involved, calculation schemes
are based either on production volumes and prices or on costs
stored in the SAP PSA ledger.
The formulas in the calculation categories involve the
following types of functions:
Production volumes and revenues calculates gross
revenue by multiplying the volume for the period by the
price per unit.
Government royalty calculates a percentage of the results
of the production volumes and revenues formula and
deducts that percentage from the results.
The cap or limit of the contractors recovery of costs calculates a percentage of the production volumes and revenues
formula as the maximum cost to be recovered with revenues.
Actual costs selects data from the ledger and applies recovery rates for different types of costs.
Profit including excess profit adds excess profit to regular
profit, resulting in one number for profit. The system then
splits the profit between the contractor and the government,
based on the percentage specified for each. This may apply in
certain instances, but it is not always enforced, because excess
profit could go to the contractor.

Profit excluding excess profit excludes excess profit from

profit calculations, if the excess profits (above the actual costs
and less than the cost recovery cap) are going entirely to the
government.
Excess profit or excess cost carryforward is the gap
between the cost cap and the assigned costs. An excess profit
results if the costs are lower than the cost cap. If the costs are
higher than the cost cap, then the excess cost carryforward
function carries forward excess costs to the next accounting
period.
Other costs determines additional costs outside the normal
sequence of calculating profit. This calculation category is
not included when calculating gross profit. It can be used,
for example, if the government advances a loan to a contractor.
Adjustments or transfers calculates funds that are manually transferred, either from one PSC to another or within
the same PSC, between different ventures or equity types.
Net excess profits deducts the amount resulting from the
other costs formula and the adjustments or transfers formula, from the amount calculated by the excess profit or excess
cost carryforward formula.
Production adjustments allows you to account for gains or
losses in production.
Gross entitlement provides a summation of calculation
categories. The split between the contractor and the government is summed up (rather than calculated as a ratio).
Entitlement adjustments facilitates funds transfers
between the contractor and the government, between the
government and partners, or between partners identified
within the PSC.
Net entitlement provides a summation for each partys
share, to show an adjusted net entitlement line with
percentage share.

DATA TRANSFER FROM AN

SAP JVA SOURCE LEDGER TO
AN SAP PSA LEDGER
Details of the formulas are specified within calculation schemes,
which define the percentages that the system uses for various
calculations. Percentages are specified on a sliding scale basis.
You must assign calculation types and schemes for specific
combinations of PSCs and products. This assignment links the
percentages in the schemes to the formulas within the calculation categories.

When SAP JVA is the source ledger for an SAP PSA ledger, joint
ventures are assigned to the PSC. You can control data transfer
to the SAP PSA ledger by using validation rules that specify the
data that the system will roll up for specific combinations of
PSCs and products. Beginning with SAP R/3 4.6B, SAP PSA
only works together with SAP JVA. Activating SAP PSA involves
activating SAP PSA roll up and creating an SAP PSA document
number range.

SLIDING SCALE FREQUENCIES

You can specify percentages for PSC calculation schemes in

detail with the calculation scheme transaction. You can also
specify a sliding scale (range) of percentages. Each percentage is
applied to a production volume or value (threshold), based on
the amount of the production volume or value. Sliding scale
frequency is independent of volume frequency, so there is
complete flexibility of frequencies and units of measure. Also, a
revenue-to-cost index factor can be used as a threshold.

SAP PSA LEDGERS

There are two sets of ledgers defined for SAP PSA: cost ledgers
4P and 4Q, and partner ledgers 4R and 4S. Each set can have
one or two physical ledgers capable of storing up to four currencies besides the transaction currency.
PLANNING FUNCTIONS

To fulfill government requirements, a variety of planning functions are available in SAP PSA.
These functions allow you to:
Set up multiple versions of a cost plan
Enter production, pricing, and partner entitlement data in a
cost plan
Copy cost plans and actuals as new plan versions
Execute and reverse calculations of planned entitlement as
required
The first step in a periodic production sharing process involves
rolling up recoverable costs. PSC costs are rolled up from SAP
JVA to the SAP PSA ledger. The roll up can be done for both
actual costs and planned costs, which are originally planned in
SAP Controlling and then transferred to SAP JVA.
You can selectively roll up costs by using SAP JVA to map PSCs
to joint ventures and equity types. SAP JVA simultaneously
assigns calculation schemes to the costs, based on user-defined
criteria, such as product type or cost category. You can also differentiate between capital expenses and operating expenses.

DEFINING RULES FOR PSC

COST DERIVATION
The rules for PSC cost derivation allow you to derive transactional cost data from the source ledger for roll up to SAP PSA.

JVA Special Ledgers

Roll Up
Rules

PSA Roll Up Ledgers

Summary
Balances
JVT01

PSA
Roll Up

Summary
Costs
JVPSC01T

Actual
Items
JVS01

Plan
Items
JVP01

Ledger 4A
Ledger 4C

Actual
Items
JVPSC01A

Ledger 4P
Ledger 4Q

Figure 3: PSA Roll Up from SAP Joint Venture Accounting

10

Plan
Costs
JVPSC01P

SAP PSA features sets that specify individual entries or ranges

of entries to be used as selection criteria in the rules used for
SAP PSA. These sets also select cost data for specific types of
cost calculation. Also, in addition to or instead of sets, rules
can be defined to transfer costs from SAP JVA to SAP PSA.
You can assign sets to the rules and create sets for cost data
selection in the SAP PSA rules transaction area. Usually, you
assign multiple sets (consisting of lists of basic sets) to a rule.

PERIOD MANAGEMENT

DAILY VOLUME DATA ENTRY

The open PSC periods transaction is available to specify the

periods of time that should be opened for a particular company code, to allow PSC transactions.

You can enter SAP PSA volumes and populate the volume data
record table (T8PSA_INPUT), by using the following transactions:
Actual production data entry
Daily production data entry transactions and interfaces

AUTHORIZATIONS FOR DATA ENTRY

SAP PSA includes authorization features that allow system

administrators to limit users access to SAP PSA transactions,
according to a particular set of fields, including the company
code field. With the use of company code and other relevant
fields in setting up SAP PSA authorizations, users from different
companies can use the same SAP PSA transactions, but will be
allowed to access only to their companys data within the
transactions.

ACTUAL PRODUCTION DATA ENTRY

You can use this transaction to enter volumes and prices directly into the T8PSA_INPUT table. You can also enter adjustments, as required, in this transaction. The SAP PSA calculation retrieves the volumes and prices in the T8PSA_INPUT table.
The volumes are stored by:
Company code
Version
Year
Month
PSC
Product
Venture
Equity type
Volume type, including production, production adjustment,
take or pay, and free gas
DAILY PRODUCTION DATA ENTRY TRANSACTIONS AND
INTERFACES

You can enter volumes, prices, and adjustments, by using the

following daily data entry transactions:
Maintaining prices defines pricing data.
Maintaining lifting data by PSC captures cargo information classified by property, which is assigned directly to a
company code and a PSC.
Maintaining production volumes defines production volumes and any gains or losses attributable to storage or transportation.
Maintaining adjustments defines adjustments to production data and any gains or losses attributable to storage or
transportation.
Maintaining pricing by terminal supports the entry of
pricing for a particular terminal.

11

SPECIFYING THE FREQUENCY

OF PRODUCTION VOLUME
ENTRIES
Maintaining lifting data by terminal captures cargo information classified by a terminal that is either associated with a
company code or independent of a company code.
Maintaining weighted average price establishes the
frequency with which the system calculates the selling price
for a particular company code, PSC, and product combination.
Maintaining weighted average price for arms-length
sales allows users to maintain a monthly average price for
arms-length sales.
Arms-length/non-arms-length definition specifies
industries that are physically close to the production (armslength) and industries that are further away (non-armslength).
COEP% for production interface is used to split the lifting
defined by the terminal for all involved PSCs and partners.
Split lifting by PSC is used to update the company code
and PSC of lifting data entered for a company codeindependent terminal.
After daily data is entered, you use an interface transaction
to update monthly data with the daily data that was entered.
The interface carries out calculations for volumes, prices, sales
splits, and lifting data.

12

A frequency specifies how often production volumes must be

entered into the system. The following frequencies are available:
Daily average by month
Daily average by quarter
Monthly
Quarterly
Semiannually
Annually
The production volume entry function specifies how often
production volumes must be entered in SAP PSA. This interval
must be equal to or less than the reporting frequency specified
for the PSC.

REPORTING FREQUENCY
You use the reporting frequency function to specify the
frequency of SAP PSA calculations monthly, quarterly, biannually, or annually. The system can execute the SAP PSA calculation process only for the frequency specified in the PSC
master data. If the reporting frequency for the PSC is specified
as monthly, then the system can execute the SAP PSA calculation process for any single accounting period.

SAP PSA CALCULATION

PROCESSING
The SAP PSA calculation processing with PSC groups function
allows a PSC to stipulate the following: When the costs of a
particular PSC that is within a group of PSCs exceed the cost
recovery cap, the excessive costs are transferred in the current
period to a producing PSC in the same group.
Only one PSC in a group of PSCs can be designated as producing. In contrast, for PSCs that are not in a group and that
have costs that exceed the cost recovery cap, the excessive costs
are transferred from the current period to the following period.
SAP PSA CALCULATION PROCESSING WITH MULTIPLE
VENTURE AND EQUITY GROUPS

In SAP PSA, a PSC can contain multiple venture and equity

groups, because multiple venture and equity groups can be
assigned to a single PSC in a single period. Depending on the
parameters, the calculation is performed either by PSC or by
equity group. By default, the calculation and reporting is performed based on equity group level. If you choose to perform
the calculation by PSC level, the report is broken down by
equity group. However, since all sliding scale definitions are on
a PSC level, the calculation uses the threshold based on the
PSC level, but applied to the equity group level.
Figure 4 shows an example of an SAP PSA calculation for one
PSC and one equity group.

13

Further, within the same PSC, you can assign single products
(that is, products not assigned to a combined product), in addition to combined products (including the assigned products).
EXECUTING ACTUAL ENTITLEMENT CALCULATIONS

You use this transaction to execute calculation processing of

actual entitlement and to review the resulting SAP PSA entitlement report. This report includes the production volumes,
organized by calculation categories, and the corresponding
breakout by government and contractor shares.

Figure 4: SAP PSA Calculation by Equity Group and PSC

To process multiple venture and equity groups, the system

evaluates volumes or revenues for a PSC while considering the
rates that should be applied for certain costs. When multiple
venture and equity groups for a PSC are involved in calculation
processing, the total volume or revenue for that PSC is adjusted to the volume or revenue for each joint venture and
equity group. The system uses the adjusted volume or revenue
of the PSC to determine the rates to be applied to the adjusted
volume for each joint venture and equity group involved in
processing.
SAP PSA CALCULATION PROCESSING WITH
COMBINED PRODUCTS

In SAP PSA, combined products aggregate calculation results

for all the products assigned to a combined product. You can
enter combined products in the system by using the Create
SAP PSA Products transaction, just as you do for real products. When you assign a combined product to a PSC, the configuration settings of the calculation schemes and types ensure
that costs are rolled up to the combined product.

14

TRANSFER FUNDS

ENTITLEMENT ADJUSTMENTS

The transfer funds feature in SAP PSA allows you to transfer

funds from one PSC to another. It also enables you to transfer
between different ventures and equity groups or products
within the same PSC, as required. This feature is distinct from
the automated roll up of costs from the source ledger. The
transfer involves forwarding a credit amount from one PSC to
another.

The entitlement adjustment feature in SAP PSA allows you to

transfer funds within one PSC from:
Contractor to government
Government to contractor
Partner to government
Partner to partner

You would ordinarily use the transfer funds feature after initial
calculations reveal excess profit in one PSC and a cost carryforward condition in another PSC.
Further, reversing a transfer is possible if required. Reversing a
transfer involves executing two transfer reversals, one for the
receiver record and one for the sender transfer record. This
reversal must take place before the calculation has been posted.

An entitlement adjustment involves forwarding a credit

amount from one participant in the PSC to another. Entitlement adjustments are used to change the regularly calculated
split between the contractors (partners) and the government.
You can also reverse an entitlement adjustment, if required. Reversing an adjustment involves executing two transfer reversals,
one for the receiver record and one for the sender transfer
record.

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COST AND STOCK

ADJUSTMENTS

ADDITIONAL SAP PSA

CALCULATION FEATURES

SAP PSA also features cost adjustment functions that support

the processing of contractor entitlements, as well as stock
adjustment functions that facilitate stock transfers between
PSCs and stock swaps across PSCs and a crude stream. Furthermore, stock adjustment functions include restatements of
prior-year PSC accounts and reason codes that identify why an
adjustment is made.

In addition to the basic functions required to support the minimum reporting requirements of PSCs, SAP PSA offers the following enhanced features that streamline and further automate the reporting process:
Multiple products are possible for each SAP PSA contract.
Multiple source ledger master data objects can be mapped to
a single PSC and product combination, with cost roll up, following this mapping.
Aggregate calculation results can be produced for all products in a PSC.
Multiple calculation and reporting frequencies are supported, including reporting monthly, quarterly, semiannually,
and annually.
Expenses that exceed the amount of recovery allowed for a
period can be automatically carried forward to the next period in the same PSC or can be carried over to another PSC in
the same period.
Production that exceeds actual costs for the period, but that
falls short of the maximum amount of recovery allowed for
the period, can be apportioned in various ways, depending
on customization.
Additional line items (other than rolled-up costs) can be
accommodated.
Manual transfers of credits between PSCs can be posted
directly.

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SAP PSA REPORTING

Various SAP PSA reports are available to review the results of
PSA processing and to meet your reporting needs, including:
PSA print entitlement report displays the actual
entitlement calculation that was previously executed (see
Figure 5a).
Document displaying by period displays results, according
to the documents that were created and posted.
JV partner entitlement displays the entitlement of each
partner that is a contractor for a PSC or a group of PSCs (see
Figure 5b).
Statement of storage entitlement displays total stock entitlement for the government and each of the partners, as well
as stock adjustments and stock swap or transfer amounts
(see Figure 5c).
PSC master data displays an overview of PSC master data.
Production data with adjustments displays an overview of
production data with corresponding adjustment amounts.
Lifting data displays lifting data, including products and
partners involved, the volume, and the lifting date.
Flat prices report provides details about prices per unit and
corresponding periods.
Adjustments provides an overview of adjustments to
production volumes.
Partner list report provides an overview of actual or
planned quantities or amounts calculated for a particular
partner, PSC, and product combination.
Displaying ledger summary displays ledger cost data.

Figures 5a, 5b, and 5c show sample reports you can create in
SAP PSA:

Figure 5a: Example of an SAP PSA Entitlement Report for One PSC

Figure 5b: Example of an SAP PSA Joint Venture Partner Entitlement Report
for One PSC, Venture, and Product

17

INTERPRETING RESULTS OF
SAP PSA CALCULATIONS
You can interpret the results of SAP PSA calculations by using
the following transactions:

Production data entry transaction

The production data entry transaction allows you to review
production volumes and revenues, which are critical for executing SAP PSA calculations. With this transaction, you can
review volumes and prices per unit for specific PSC and product combinations for particular accounting periods and fiscal years.

Display ledger summary transaction

Figure 5c: Example of an SAP PSA Storage Entitlement Report for One PSC,
by Product Breakdown

A ledger summary (ledger 4P) is available to provide details

about cost and cost recovery records in a venture. The ledger
summary stores cost data that was rolled up from the source
ledger to the SAP PSA ledger.
A second ledger summary (ledger 4R) is available to provide
details about the figures stored within the calculation process
on the calculation type and partner level.

18

The display ledger summary transaction allows you to

review cost data, which is also critical for executing SAP PSA
calculations. With this transaction, you can review the PSC
standard ledger, which stores cost data that was rolled up
from the source ledger to the SAP PSA ledger. If there is an
amount by which actual costs exceed the cost recovery cap
for the current period, the ledger reflects a credit for that
amount to the PSC and product for the current period. The
ledger also reflects a debit for the same amount for the next
period, enabling the system to apply that amount against the
cap during calculation processing in the next period.

Data browser transaction

After the system executes the SAP PSA calculations, the
PSCHD, PSCIT, and PSCCR tables are updated with different
aspects of the results. To fully interpret the results of calculation processing, you can review these tables using the standard Data Browser available in the ABAP Workbench Tools.

SUMMARY
SAP PSA is a key capability of the SAP for Oil & Gas industry
portfolio. By reporting on government royalties, contractor
costs and recovery tracking, and profit allocation, SAP PSA
delivers a single, integrated solution for upstream companies
involved in production sharing.
For more information please contact us at:
SAP AG
Neurottstrasse 16
69190 Walldorf
Germany
Mailing address:
69189 Walldorf
Germany
SAP information service:
Tel. +49-180-5343424
Fax +49-180-5343420
http://www.sap.com

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www.sap.com /contactsap

50 066 088 (03/10)