Income Determination in the International Petroleum Industry

Transcription

1 Abdulhadi Hassan Taher Former Governor-General, Petroleum & Mineral Organization Managing Director, Saudi Arabian Fertilizer Co., Saudi Arabia Lecturer in Business Administration, Riyadh University Aramco Board Member 196S-1986 Income Determination in the International Petroleum Industry SAQI London San Francisco Beirut

2 Contents Introduction Foreword Chapter I: Orientation and Introduction 1.1. The Problem 1.2. Science and the Businessman's Problems 1.3 Accounting Aims and Methods 1.4 The Distribution of Profits 1.5. Conclusion Chapter II: A Systematic Choice 2.1. Choice Processes 2.2. Accounting Principles and Standards 2.3. Theory of the Neutral Value of Net Income 2.4. Toward Establishing Goal-Oriented Choice Criteria 2.5. The General Choice Criteria 2.6. The Basic Accounting Frame of Reference 2.7. The Process of Choosing by Elimination 2.8. The Conclusion

3 Income Determination in the International Petroleum Industry Chapter III: Accounting Data: An Information- Communication Problem Organizations and Accounting The Homeostatic Organization Model The Relationship between the Homeostatic Model and the Other Models of Organization Accounting Data, Accounting Methodology, and the Managerial Decision-Making Process 53 Chapter IV: Accounting Contribution to the Survival of the Organization Security and Survival The Environment of an Organization: A Symbolic Formulation The Organization Defined Conclusion 76 Chapter V: The Organization Model and the Basic Premises of Accounting Theory Definition of Accounting Toward Income Determination The Fund Theory The Entity Theory of Consolidated Statements Conclusions s 88 Chapter VI: Costs and Revenues: The Present Determination Techniques Production Cost and Its Elements The Accounting Net Income Formula 98

4 Contents Chapter VII: Prices and the Determination of Revenues Revenue Measurement Transfer Prices and Revenue Determination Petroleum Market Economics Approximating an Arms-Length Price 108 Chapter VIII: The Problem of Joint Costs in the Production of Hydrocarbons A General Orientation Exploration Costs: Expensing vs. Capitalization Drilling and Development Costs Operating and General Costs of Hydrocarbons Production Conclusions 124 Chapter IX: Joint Cost Allocation between Crude Oil and Natural Gas Introduction Current Methods 126 Chapter X: Joint Cost Allocation - The Development of a More Objective Method An Outline of Underlying Premises Unit Cost and the Price of Oil and Gas One or More Products Criteria for a More Objective Selection The Weight Problem The Atomic Joint Cost Allocation Methods The Evaluation of Results Choosing a More Operational Method 152

5 ) Income Determination in the International Petroleum Industry Chapter XI: Royalties, Oil Inventories and the Cost of Goods Sold The Theory of Cost-Expense Asset Value Measurement Assets of an International Petroleum Organization Growth of an International Petroleum Organization 159 Chapter XII: Accounting Theory of the Neutral Value of Net Income The Neutral Value of Net Income Underlying Abstract Premises Theory of the Neutral Value of Net Income: The Empirical Particular Adaptation 172 Chapter XIII: The Neutral Value of Net Income: A Partially Empirical Illustration Introduction Production Revenues The Measurement Adjustment Process 188 Chapter XIV: Analogue of a Purposive System of Human Behavior Systems Purposive Systems Income and Its Determination Related Research Extension 199 Appendix A: A Lesson in the Chemistry Of Hydrocarbons 203 Appendix B: Technical Data Underlying the Atom-Mol Joint Cost Allocation Methods Calculation of Weight, Mols and Molecular Weights for Gas Calculation of the Carbon Atoms Calculation of Molecular Weight for Crude Oil 212

6 Contents 4. Calculation of Carbon Atom-Mol Method Calculation of the Hydrogen Atom-Mol Method 213 Bibliography 215 Index 219