Overview

Contracts are use extensively in the petroleum industry both to structure commercial arrangements and recite the rights and obligations of private enterprises and the state. The goal of all negotiations is to achieve a sustainable and enforceable contract. This course combines business, legal and cross-cultural training using various exercises that simulate how issues are resolved in negotiating contracts such as joint venture agreements, production sharing contracts, oil field service contracts and gas sales and purchase agreements.

The objective of the course is to improve the participant's personal skill in negotiating agreements common to the petroleum industry. In order to do this it is important to be aware of the interrelationship between economic outcomes and negotiating positions. Computer models are used to 'track' the economic consequences of the exercises. In addition, the understanding reached at the bargaining table is to be reflected in written agreements and memorandum. As a final training tool, simulations are video taped for review and feedback from the instructor after each round of negotiation.

Contents

The following topics are presented in the course:

1. The negotiation process
   Team structure - An effective negotiating team that is composed of legal, analytical, and communication skills.
   
   Use of financial models - A successful outcome depends on being able to understand the financial impact of the offers and concessions exchanged in the negotiation process.
   
   Preparation and planning - Using planning tools such as checklists, critical path schedules and transaction diagrams can enhance the outcome of negotiations.
   
   Tactics and styles - Recognising and using negotiating tactics to improve bargaining position.
   


2. The Drafting Process
   Terms sheets - The main points of an agreement should be documented as early as possible to provide the framework for a definitive contract.
   
   Memorandum of Understanding - Not all agreements are binding contracts and it is important to know the difference.
   
   Drafting as negotiation - Much negotiation in the petroleum industry is conducted through the exchange of documents.
   


3. Relations between companies and governments
   Production Sharing Contracts - The affect of cost recovery limits and government take on project return and product prices.
   
   Political Risk - Techniques for managing political and regulatory risk in the petroleum industry in order to maintain contract stability.
   
   Cross-cultural communication - Understanding the role of organisational and national cultures on negotiations.