Production sharing contract (hereinafter referred to as to PSC) is not a contract exclusively applicable in the oil industry. It is a relatively recent development for regulating the relationship between foreign companies and the host country - or the host country's national company - for exploitation and development of natural resources of the said country. Thus, in Indonesia, the Japanese have negotiated and entered into production sharing contracts with the Indonesian Government, amongst other thing, in "nickel, timber, sugar, fish, pearls and maize. " From the above, it is obvious that the extent of the types of natural resources which can operate under a PSC is up to the imagination and innovation of mankind. However, this article is a consideration of the PSC exclusively in the light of the oil industry.