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The course will examine the broad types of regime adopted by governments in the
regulation of their petroleum resources.
The course will also examine in varying degrees of depth the following basic
contracts found in the international upstream oil and gas industry:
- Production sharing contracts;
- Joint operating agreements and accounting procedures;
- Seller’s Representative agreements;
- Farm-in agreements;
- Gas sales contracts;
- Lifting/Offtake agreements;
- Transportation (pipeline) agreements.
The negotiation of these basic contracts will also be discussed.
Objectives
The objectives of the course are to provide participants with:
- A fundamental understanding of the ways in which the exploration for and
development of oil and gas reserves are controlled and regulated by
governments;
- A sound knowledge of the key provisions of the basic contracts employed in
the international upstream oil and gas industry; and
- An understanding of the way in which these basic contracts are negotiated.
Appropriate exercises will be carried out as a means of reinforcing and applying
principles examined during the course.
Who Should Attend?
Corporate lawyers involved in the petroleum business, commercial managers of oil
and gas companies, technical personnel who have an interest in understanding the
legal framework within which business in the international petroleum industry is
conducted and those involved generally in the negotiation of oil and gas contracts.
Course Content
A brief introduction to the main regulatory systems adopted by governments,
namely:
- Licensing/concessionary regimes;
- Production sharing contracts;
- Service contracts: risk contracts/fee for service contracts;
- Joint venture/back-in contracts.
Brief analysis of the role of national oil companies.
Production Sharing Contacts
The use of production sharing contracts is prevalent in the international petroleum
industry. The course will involve an in-depth review of the major terms of a
“typical” production sharing contract, including:
- Cost oil/profit oil split;
- Classification of costs for cost recovery;
- Signature bonuses;
- Production bonuses;
- Economic stability;
- Minimum work programmes;
- Government rights to purchase production – pricing mechanisms;
- Local employment/local goods & services;
- Technology transfer;
- Additional taxes and royalties;
- Taxation – depreciation and “ringfencing”;
- Environmental protection;
- Currency/exchange control;
- Relationship between government and contractor;
- Voting;
- Operator;
- Relationship between management committee and operating committee;
- Default;
- Assignment;
- Dispute resolution – sole expert/international arbitration.
Joint Operating Agreements and Accounting Procedures
The joint operating agreement is the agreement typically used by joint venture
participants to govern the relations between them. A detailed analysis of the key
provisions of a “typical” joint operating agreement will be carried out, including:
- Relationship between the PSC and the JOA;
- Relationship between the contractor parties;
- Appointment and removal of the operator;
- Duties of operator;
- Role of operating committee;
- Voting procedures;
- Programmes and budgets;
- Expenditure control procedures – AFE’s and cash calls;
- Default;
- Abandonment;
- Sole risk operations;
- Dispute resolution;
- JOA accounting procedures.
Farm-in Agreements
Typically, a company will acquire an interest in an area either by direct application
to the relevant government authority or by “farming-in” to the interest of an
existing interest holder. Since farm-in agreements are very common in the industry,
a sample farm-in agreement will be examined, with particular emphasis on the ways
in which an incoming party may acquire or “earn” an interest from an existing party.
Gas Sales Contracts
Gas sales contracts are becoming increasingly important in the petroleum industry.
They are amongst the most complex agreements to be found in the oil and gas
sector. A “typical” long- term gas sales contract will be analysed and key terms and
conditions discussed, including:
- Contract duration;
- Issues relating to contract quantity (ACQ, DCQ, make-up gas, build-up etc);
- Issues relating to gas quality
- Payment provisions, including “take-or-pay” arrangements;
- Pricing.
Transportation Agreements
The legal and commercial issues peculiar to pipeline transportation agreements will
be reviewed.
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