Managing and Negotiating Upstream Petroleum Agreements: From both the Government and Minority Participant Perspective

This five-day workshop is an ideal program for those representing the interests of host countries who wish to learn the critical aspects of negotiating and managing successful Upstream Petroleum Agreements and how they should participate in the management of the Upstream project. The course is divided into three parts: Part I is a series of lectures in which participants will learn the foundations and basic rules of International Law and review the most used contracts in the industry; Part II is a series of lectures and practical assignments allowing the participants to learn the “Getting to Yes” Negotiating Process; and Part III is a series of interactive sessions where teams of participants, playing the role of either the government or the contractor, will actively negotiate and achieve win-win outcomes for the most often negotiated issues. This challenging learning process allows participant to internalize the essential aspects of both the Upstream Petroleum Agreements and a truly Effective Negotiation Process.

Additional information

Program Type

Key Benefits

During this program the participants will:

  • Learn the essentials of Upstream Petroleum Agreements.
  • Learn a universally accepted negotiation process and apply it to resolve typical “hot button” issues that impact the government or minority participants.
  • Apply this process to resolve “hot button” issues in Upstream Petroleum Agreements.

Instructional Format

This intensive program includes a practical integration of lectures, group discussion, and negotiating sessions. Using a set of model agreements, participants, working in teams, will analyze the agreements, identify and negotiate key issues with their counterparts attempting to reach a resolution of the issues.

Who Should Attend

This program is ideal for the government’s resource managers who wish to negotiate Upstream Petroleum Agreements, manage their implementation or administer problems related to key issues. Attendees will obtain an overview of today’s major upstream agreements, learn how the government specialists need to participate throughout the project development stages, and how to apply a positive negotiation process to resolve the major IOC-government key issues that may come up during the life of these agreements.

Program Content

Part I: Host Country and JV Petroleum Agreements

Introduction to the Basic Principles of International Petroleum Law

Commercial law, how laws are organized: civil law, common law, topical laws and regulations, enforceability, difference between a law and a fact question, legal analysis. International petroleum law basic principles.

Principles and Applications of Contract Law and Petroleum Service Agreements

How offers are made, bid solicitations (RFPs), terms. How acceptance is made, varying terms, cultural and language issues in international contracting. Written contracts– examination of important clauses. Oil and gas industry examples.

Host Country Agreements: Legal Structure and Fiscal Terms

Production sharing, tax and royalty, service contract, hybrid. Special problems contracting with a government authority, police power and expropriation, unilateral changes, sovereign immunity, stability clauses.

Standard Joint Interest Petroleum Agreements: Joint Venture and Joint Operating Agreements

What they are and how they work, outline of provisions, most important issues, discovery vs. commercial discovery, standard of performance, project governance (plans, budgets, meetings, voting, disagreements, transfers, withdrawal, disputes, accounting). Unitization: concept and five major issues.

Transfer of Interest in Petroleum Agreements

Asset Sales vs. Stock Sales, Sale of partial interests in Host Government Contracts, Structuring: Cash vs. Drill to Earn, Carried Interests and hoe they are repaid, Consent Rights, Preemptive Rights, Right of First Offer.

Part II: Effective Negotiating Process – Getting to Yes

Step One — Discover Underlying Interests of the Parties

Underlying motivations, needs and concerns, fears and aspirations, understand your interests, understand the interests of the other side.

Step Two — Generate Options to a Negotiated Solution

Inventing options to meet underlying interests; option as a possible agreement but not a commitment; obstacles that inhibit the invention of options.

Step Three — Identify and Use Independent Standards

Making negotiation a joint search for independent standards, use standards to persuade and protect, distinguish which standards are appropriate.

Step Two — Generate Options to a Negotiated Solution

Inventing options to meet underlying interests; option as a possible agreement but not a commitment; obstacles that inhibit the invention of options.

Step Three — Identify and Use Independent Standards

Making negotiation a joint search for independent standards, use standards to persuade and protect, distinguish which standards are appropriate.

Part III: Effective Negotiating Process – Getting to Yes

Identifying and Managing Key Issues in Upstream Agreements

Most upstream energy project agreements consist of issues which are 80% non-controversial and 20% the subject of most of the negotiations. The workshop sessions focus on those key negotiated issues from the point of view of the interests of host countries or minority participants in energy joint ventures. Through the role playing process teams will be given key issues to negotiate in a classroom setting. Discussion will focus on suggestions for handling and resolving these issues.
Production Sharing Contracts (PSC)

  • Commercial Terms
  • Contract Term
  • Minimum Exploration Work Program
  • Control of Operations
  • Information Sharing
  • Annual Work Program and Budget
  • Project Development Plan
  • Domestic Energy Needs
  • Transfer of Interest
  • Accounting Issues
  • Sales of Crude Oil
  • Sales of Natural Gas

Joint Operating Agreements (JV Agreements)

  • Participation in Decision Making
  • Participation in Operations
  • Information Sharing
  • Transfers of Interest
  • Accounting Issues
  • Third Party Contracting
  • Carried Interests

Transfer Agreements (Farm-out Agreement)

  • Timing of Transfer
  • Drilling Obligations
  • Who Operates?
  • Carried Interests: How Costs are Recovered?
  • Consent
  • Preemption and Right of First Negotiation