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LEGAL ASPECTS of the OIL & GAS INDUSTRY a presentation to partners and staff of Norton Rose by HEW R. DUNDAS of DUNDAS ENERGY SERVICES International Petroleum Law and Risk Management Advisers 2 nd April 2003
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OVERVIEW of PRESENTATION n History, Geography & Politics n Structure of the Industry n Technical Features n Environment, Safety and Regulation n Finance, Taxation and Insurance n Oil Industry Agreements n Life Outside Documents n Dispute Resolution n Conclusions
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HISTORY n 4,000 BC or earlier n Col. Drake (Pennsylvania- 1859) n The Major Discoveries n Stop Drilling – Now ! n “There Is No Oil In The North Sea” (1959) n “The Prize” by Daniel Yergin n 1958/1982 LoS Conventions
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GEOGRAPHY n Locations Inconvenient n Boundary Issues n International Pipelines n Tankers n Jurisdictional Issues n NIMBY
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POLITICS n Cross-Border/Regional n Major Economies without Indigenous Oil n Net Exporters/Importers n Perceptions of US Foreign Policy n Electioneering Football n Chancellor’s Goody-Bag n Tabloid Target
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STRUCTURE of INDUSTRY n Upstream/Downstream/Midstream n Pipelines & Transportation n Integration vs Independence n Standard Oil n Gas is NOT Oil n Power is Neither
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TECHNOLOGY n Innovation n Cost Efficiency n Designers vs Constructors vs Operators n Recovery Rates n Climbing Mount Everest n Keep It Simple, Stupid
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ENVIRONMENT, SAFETY & REGULATION n Sea Gem/Piper Alpha n Goal-Setting vs Prescription n Exxon Valdez/Braer n Brent Spar n Over-Regulation/Ignorant Regulators n Political Correctness
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OIL INDUSTRY AGREEMENTS n Petroleum Agreements n JOAs and Related Agreements n Service Contracts n Negotiation Techniques and Strategies n Relationship Management n Dispute Resolution
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PETROLEUM AGREEMENTS n Passage of Title n Royalty Agreement n Production Licence n Concession Agreement n Risk Service Agreement n Production Sharing Agreement n Relationship Management
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JOAs & OTHER AGREEMENTS n History of the JOA n US vs UK Models n AIPN/Other Model Forms n Relationship Between Parties n Assignments/Novations &c n Farm-Ins etc
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SERVICE CONTRACTS n Cyclical Nature of the Industry n Use of Model Form Agreements n Sub-Contractors n Cultural Changes 1978-2003 n Partnering n Turnkey + Equity Participation
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NEGOTIATIONS n Rights vs Interests n Co-Operation not Confrontation n Ruritania is NOT England/US n Legal Principles May Be Subsidiary n Relationship Management
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EXTERNAL LAWYERS n Who ? Why ? n Added Value ? n Specialist Expertise n Client Must Control n Some Disasters
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RELATIONSHIP MANAGEMENT n Long-Term Contracts – 25+ Years n Contrast UK Construction Sector n Change in Opposite Number n Co-Operation Not Confrontation n What are your problems ? n How can WE deal with this ?
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DISPUTE RESOLUTION n Dispute Avoidance/Prevention n Why Litigate ? n ADR largely ignored n Non-Mediation ADR n Mediation Becoming Over-Formal n Energy Arbitrators’ Panel
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CONCLUSIONS n Essential Technical Knowledge n Need Practical People n The Oil Barons’ Club n The PR Wars n Dispute Prevention n Lord Hoffman is NOT an Engineer
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