chapter  9
The Service Contracts
Pages 16

As stated in chapter 3, the term “ service contract” covers a variety of arrangements, from the pure service contract under which the contractor performs specific tasks for a spec­ ified sum of money, to the risk-service con­ tract that has features of the modem concession agreement and the production-sharing con­ tract. There are also some service contracts that involve only a limited amount of risk on the part of the contractor. The Argentine gov­ ernment has negotiated a whole range of types of service contracts, from the pure service contract to the risk contract; the Brazilian gov­ ernm ent negotiates only risk-service con­ tracts. To call an arrangement in which the contractor puts up all the capital at risk and is rewarded solely on the basis of the outcome of a risky investment a service contract is a clear misuse of the term, but this usage has evolved in large part because governments have for reasons of public policy wanted to avoid any association with the traditional concession agreement in dealings with private petroleum companies.