Epc contracts in the oil and gas sector pwc 5 there are a number of contractual approaches that can be taken to construct an oil and gas facility. However, they may not be appropriate for every circumstance and do not deal with every eventuality. In the upstream 4 bassey udo, kachikwu gives oil and gas midterm report. The need for legal counsel an oil and gas contract, properly written and equitable to bothparties, is a comprehensive legal document. Another option is to have a supply contract, a design agreement and construction contract with or without a project management agreement. Double click on the pdf and a separate page will open. Shining a light on good practice 5 reconcile subsurface and surface rights and the needs of their users. Most of the wells in the united states are drilled under one of the three major types of drilling contracts. In the nineteenth century, the term petroleum was frequently used to refer to mineral oils produced by distillation from mined organic solids such as cannel coal and later oil shale, and refined oils produced from them petroleum is a naturally occurring, yellowtoblack liquid found in. There are multiple businesses that handle a lot of these processes and must use contracts and other legal matters to protect their rights to the area. It has the largest acreage in the country from which it produces some 39 per cent of the nations oil the companys operations are concentrated in the niger delta and adjoining shallow offshore areas where it operates in an oil mining lease area of around 31,000 square kilometres. The types of contracts most commonly used in the oil and gas service industry are generally described as. Is blockchains future in oil and gas transformative or transient. Angus established the the essentials of oil and gas commercial contracts and negotiations in 2009 and it is now delivered all over the world.
Given the interest in oil contracts on the part of kazakhstani ngos, the authors of this guide organised a seminar, held in almaty under the auspices of the soros foundation kazakhstan, for representatives of more than 30 ngos from different regions of the country. Most drilling contracts require the contractor to furnish the operator with daily or frequent drilling reports summarizing the current status of the well, including the current depth of the hole and the formations. Another option is to have a supply contract, a design agreement and construction contract with. While every care is taken in the collection and compilation of data, the survey is interpretative and indicative, not conclusive. Trade nymex wti crude oil futures cl, the worlds most liquid crude oil contract. Oil and gas forms there are many areas of service for legal matters involving oil and gas. Olawuyi, senior visiting research fellow, oies and associate professor of law, hamad bin khalifa university, doha, qatar. Gas from several wells is gathered through a series of small pipelines gathering lines and then. Wti west texas intermediate, a us light sweet crude oil blend futures provide direct crude oil exposure and are the most efficient way to trade oil after a sharp rise in us crude.
Is blockchains future in oil and gas transformative or. Issues in service contracting in the oil and gas industry. The role of indemnity clauses in the contracts in offshore gas and oil jurisdiction like those dealing with drilling contracts, agreements sharing, and joint operating. Appreciate the uses of various types of oil and gas contracts. Governments are aware that most oil companies have greater financial resources, better knowledge of the oil fields as well as further experience in negotiating contracts. The case for publishing petroleum contracts in nigeria. Shell petroleum development company spdc is the pioneer and leader of the petroleum industry in nigeria.
Oil and gas law is unique given the very nature of oil and gas, and the terms and phrases about this area of law are equally unique. When the oil and gas markets are robust, many oil and gas contracts will maintain a healthy life, pursued in a spirit of cooperation and if necessary negotiated compromise. The most common types of contracts used are farmoutsfarmins, or well trade agreements, and joint operating agreements. Darcy concessions of 1901 until the more recent buy back contracts. Contracting and regulatory issues in the oil and gas and. Oil and gas is typically sold at an indexed price rather than a fixed price. This chapter outlines the risk allocation practices adopted. Pdf allocation of risk in the oil and gas contracts in. Many oil and gas contracts depart quite radically from the laws basic assumptionsabout where liability should fall following a breach of contract or a negligent act. These standard contracts contain standard contract clauses tailored to the general need for some sort of specific arrangement leaving only the insertion of special terms and particular requirements. Many first purchasers of oil and gas companies that first purchase and take title to the production, such as companies engaged in the business of transporting oil and gas from the oilfields are generally not in the business of accepting the price risk associated. Whilst this is true to some extent, it should also be noted that the concerns are often connected. Jan 21, 2018 within the realms of oil and gas agreements, concessions are the oldest type of contracts that first emerged during the 1800s oil boom in the united states and became pervasive in the middle east starting with the oil boom in saudi arabia. Oil and gas law introduction oil and gas law is a combination of elements of contract law, property law, and tort law.
Gas contracts and agreements gas contracts and agreements unlike oil, gas cannot be moved by truck or similar methods. Jan 15, 2018 oil and gas contracts have evolved to address both situations. Structuring indemnification and additional insured provisions navigating antiindemnity statutes and negotiating risk allocation todays faculty features. A sudden drop in commodity prices will undoubtedly bring economic imbalances into the relationship. Unlike the income tax in iraq for individuals and businesses, which is 15 percent, the tax rate for oil and gas and related industries is 35 percent. Historically the main source of financing in iranian oil and gas industry has been foreign investment, entered in to the country through upstream oil and gas contracts from the early oil and gas concessions i. Legal strategies in upstream oil and gas contracts to. Most drilling contracts require the contractor to furnish the operator with daily or frequent drilling reports summarizing. Given the interest in oil contracts on the part of kazakhstani ngos, the authors of this guide organised a seminar, held in almaty under the auspices of the soros foundation kazakhstan, for representatives of more than 30 ngos from different regions. Energy policy center, levin college of urban affairs. Oil and gas contracts have evolved to address both situations. Hatch, what are the types of federal oil and gas leases.
The essentials of oil and gas commercial contracts and. A contractual agreement between a contractor oilgas company. The word petroleum comes from the greek word petra meaning rock and the greek word elaion meaning oil. Oil and gas forms, leases and documents us legal forms. Request pdf oil and gas service contracts around the world. These requirements are in addition to, and apart from, the requirements of. For example, if a third party contractor incurs a loss to its own people or equipment, because of its own actions, it should bear that loss independently from the other parties, and indemnifying the other parties up or down the chain privity. Since 2005, angus has operated as a management consultant specialising in strategy formulation, negotiations and international business for the oil and gas sector. Because of the diversity of ownership of oil and gas interests and or the need to share economic risks, the oil and gas industry has utilized a number of different contractual arrangements.
Penalty clauses clauses designed to dissuade parties from breaching contract terms through poor performance are unenforceable in anglosaxon law, but commercial oil and gas contracts will include a clause which provides that the defaulting party pays a fixed sum in the event of a breach. Also, there could be families that have mineral rights for oil and gas that may want to lease those. Oil and gas projects are risky undertakings, which may cause severe damage to property and the environment, not to mention, personal injury and death to personnel. Negotiating the right contract is vital to a governments efforts to reap the benefits of its natural.
Investment and taxation guide 11 many readers may argue that the most critical barrier to indonesias oil and gas investment is the regulatory hurdles and bureaucratic processes associated with the approval of expenditure. Legal strategies in upstream oil and gas contracts to attract. Upstream oil and gas production and exploration entail high risks that require costeffective and effective means for risk allocation, indemnity, and assessment of liabilities between contractor and operator taverne, 2008,p. Four areas of consideration can help shape the discussion and lead key players to. The drilling of an oil and gas well is an expensive and hazardous endeavor requiring great expertise. Local content and procurement requirements in oil and gas. When traders need the current oil price, they check the wti crude oil price. Bmc training provides a training course in oil and gas contracts in oil and gas training. Registration and continental breakfast picasso 2 9. Local content and procurement requirements in oil and gas contracts. Risk allocation in oil and gas contracts university press. This portion of the seminar is designed to introduce ohio lawyers to some of the more common oil and gas contracts, and the issues that most frequently come to pass during negotiations of those contracts. When combined with the daily open outcry session, nymex access extends the trading day to approximately 22 hours. Put shortly, the oil industry is often less interested in fault than in economic efficiency and uses its contracts to reorganise prospective liabilities accordingly.
A well is most often drilled by a drilling contractor, a entity engaged in the business of drilling oil. Regional trends in the middle east and north africa damilola s. For purposes of this article, reference to a federal oil and gas lease will mean a lease issued under the 1920 mineral leasing act if a rightofway is. Governments should employ public, openly licensed and userfriendly systems to allow all stakeholders to identify and reconcile overlaps between subsurface and surface rights and needs. These requirements are in addition to, and apart from, the requirements of any other state and or federal entity. The oil and gas sector is the prime source of this funding. The operator the party who has the legal right to produce oil and gas from a given tract may elect to drill a well.
1319 231 1405 1459 735 418 1473 450 216 543 1399 1483 158 912 1051 346 915 323 383 1124 1346 669 913 1273 245 557 417 1182 570 1308 1052