Oil & Gas Specifics

full all chapter5 chapter6 chapter7 chapter8 chapter9

chapter4 chapter5 chapter6 chapter7 chapter8 chapter9

Transparency and Accountability

Policy, Legal and Contractual Framework

Sector Organization and Institutions

Fiscal Design and Administration

Revenue Management and Distribution

Sustainable Development

  • National Resource Companies remain popular in most oil and gas producing countries, more so than in the mining sector.

  • Usually, distinct laws will be made for oil and gas activities and for the mining of other minerals. Inevitably, this difference in choice of legal design appears to suggest the existence of underlying differences between the two sets of extractive industries.

  • In the oil and gas sector, a framework approach to legislation is often preferred, with a higher degree of reliance on a related model or standard contract for exploration and exploitation than in mining.

  • Three types of agreement govern the relationship between a host government and investors in upstream oil and gas activities: the concession, the production sharing agreement and the risk service agreement. Of these, only the first is commonly found in mining.

  • Most oil and gas agreements require the contractor to purchase a proportion of their goods and services within the host country from local suppliers, to promote linkages to the local economy. Similarly, they require a preference to nationals of the host country, and the use of training programmes to transfer skills and create employment.

  • Stabilization clauses are commonly used in oil and gas agreements.

  • Natural gas discovery and development is commonly treated differently to oil in the basic agreement, with a longer period being given to the appraisal of a gas discovery and fiscal provisions being designed to reflect its different profitability to oil.

  • Contract provisions may require priority allocation of gas to the domestic market and/or set conditions for the authorization of export sales.

  • Gas contracts contain detailed valuation clauses setting out how wellhead prices are to be determined.

  • In award procedures, it is desirable and increasingly common practice that applicants for awards should be pre-qualified.

  • Where significant geological data is available and investor interest is high, competitive auction is generally considered the best option.

  • In the award of oil and gas rights, it is the work program that generally controls, usually combined with a financial/fiscal variable, such as a bonus, royalty or profit/production share. 
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