Types Of Petroleum Contracts Agreement

The three main categories of service contracts are the risky service contract, the pure service contract, and the technical support contract. Under concession (or licensing) agreements, the selected oil company or consortium carries out exploration activities. The undertaking shall take possession of all the production, if it is extracted, in return for payment of a royalty to the host State. The fee may be paid in cash or in kind. It could also take the form of an income tax on profits or other types of fees and contributions, possibly including an additional tax on profits, if this exceeds a predefined threshold. This type of contract is called a license and generally gives the holder the exclusive right to explore and develop the oil, own and market the production and own the corresponding equipment and facilities. Modern concession agreements replaced the traditional concession regime in the 1940s, when Venezuela imposed additional financial burdens on its foreign investors (such as profit-sharing in the form of taxes). All three types of oil deals are usually signed between an oil company or consortium and the government. They generally regulate the following areas: concession or licensing agreements have developed considerably as unilateral contracts since their introduction in the early 1900s, when many of the resource-rich nations were dependents, colonies or protectorates of other states or empires. The modern form of these agreements often gives an oil company exclusive rights to explore, develop, sell and export oil or minerals from a given area for a certain period of time. Companies compete by offering offers often with signing bonuses to acquire licenses for such rights. This type of agreement is widespread around the world and is used in countries as diverse as Kuwait, Sudan, Angola and Ecuador. Technical assistance contracts.

This regime is a modern form of pure service contract. The contractor provides not only services related to exploration and production, but also technologies to the indigenous people of the host country. The host country is solely responsible for financing the project, owns the crude oil, equipment and facilities related to the project and manages it through the national oil company. The company provides technical services on all aspects of the project and employs its own collaborators to pilot the project under the direction of the national oil company. The scope of technical assistance contracts is much narrower. As with other service contracts, the company is called upon to fulfil a defined mission for which it benefits from a fixed remuneration. However, unlike other service contracts, the company does not have the opportunity to participate in the resource. The technical service contract appears to be the closest to a transnational public-private partnership in which the host government has the highest bargaining power. 5. Types of upstream oil contracts with the state Popularly, international oil companies often constitute a JV to bear the risk and share the reward for large-scale or risky companies. Unlike traditional concessions and PPE, JVs allow host country partners to exercise greater control over the project.

Apart from sharing the high financial costs of the international oil project, JVs are also very useful in minimizing potential risks, such as. B.dem geological risk of not detecting oil reserves according to exploration procedures. the technical risk of working in difficult or even extreme conditions (including terrain, weather and temperature); the development risk that the found oil reservoir has characteristics such that extraction activities are impeded; and the political risk that unrest or uprisings will harm the oil project. . . .

Share Post :