Production Sharing Agreement (PSA) is a contractual agreement between a host government and an international oil company to explore, develop and produce oil and gas resources. PSAs have been widely used in Russia, which has significant oil and gas reserves.

Russia is the world`s largest producer of oil and gas, with its vast reserves located primarily in Siberia. In order to develop these resources, Russia has relied on foreign investment and technology. PSAs have been an effective way for Russia to attract foreign investment while retaining control over its natural resources.

PSAs in Russia typically involve a joint venture between a foreign oil company and a Russian state-owned enterprise. The joint venture enters into a contract with the Russian government to develop a specific oil or gas field. The contract specifies the terms of the venture, including the production sharing ratio (PSR), which determines how much of the oil or gas produced will be shared between the joint venture and the government.

PSAs have been successful in Russia, with several major projects having been developed under this model. The Sakhalin I and II projects, for example, are major oil and gas developments in the Far East of Russia that were developed under PSAs.

However, the use of PSAs in Russia has not been without controversy. Critics have argued that the terms of the contracts are too favorable to foreign oil companies, and that the government should retain a larger share of the oil and gas produced. There have also been concerns about environmental impacts, particularly in the case of the Sakhalin projects.

Despite these criticisms, PSAs remain an important tool for developing Russia`s oil and gas resources. They provide a way for the government to attract foreign investment while retaining control over its natural resources. As Russia continues to develop its oil and gas reserves, PSAs are likely to remain a key part of its strategy.