What Are The Various Operating Agreement In The Petroleum Industry

Posted by on Dec 20, 2020 in Uncategorized | No Comments

7. MARKETS ACQUISITIONS: It is also possible that a capital-rich company could enter into a joint agreement with a company with a lower market position. The objective is to gain an in-depth knowledge of its skills and technologies for future mergers and acquisitions. The rest is then shared between the oil-producing country`s national oil company (NOC) and the company in a predetermined report. Unlike the concession, ownership of the discovered oil remains owned by the state or its NOC, and the contractor acquires ownership of its share of the oil only when the oil reaches an agreed point. Article 2.2.1 of the Nigerian JOA states that “the operator conducts all joint operations of good faith and good quality, in accordance with good business practices, and the applicable rules apply to all transactions carried out in connection with this activity.” [12] As a result, the operator is required to conduct “good and good” operations. However, the operator is exonerated except for “gross negligence or wilful misconduct.” The JOA also provides for the resignation, withdrawal and replacement of an operator. If the situation of an oil reservoir coincides with an international border, each state can order an association, because the principle of sustainable sovereignty over natural resources means that states have exploitation rights on their own territory. The UN Convention on the Law of the Sea (UNDSC) establishes the principles governing the sovereign rights of coastal states to explore their territorial waters and seabed and use their natural resources on the continental shelf.

The Frigg agreements between the United Kingdom and Norway are examples of intergovernmental agreements on the formation of unity. State participation agreements are signed between a state or its authority and designated companies to allow the state or public authority, the National Oil Company or an ad hoc state entity created for this purpose to participate commercially in the joint venture. The justification of the host state is to be involved in decision-making and to benefit from the technical expertise of international oil companies. State participation agreements also provide a direct monitoring of the joint venture`s activities and ensure security of supply. Because participation is commercially based, this type of agreement is particularly popular in a high-priced environment. The JOA can also be defined as the private agreement that “divides” the solidarity commitments (as awarded by the State concerned) imposed by the licensing conditions and regulates relations, obligations and rights between the partners of the joint venture.