Upstream Agreement

During the course, the following agreements will be discussed: the SPI team was directly involved in the development and negotiation of some of the major international agreements in advance. These include production-sharing agreements after the opening of the former Soviet Union in the 1990s in Kazakhstan and Azerbaijan; and technical agreements on services in Iran and Iraq. The team also participated in the development of innovative legal and commercial solutions for unitization agreements and in the development and negotiation of exploration agreements with Iran for the exploration of the Caspian Sea. Members of the SPI team advised governments on oil and gas legislation, as well as MEPs and NGOs on agreements ahead of THE EITI. Examples of service agreements adopted and areas covered by risky service agreements are the least used types of agreements among the following three. They have been used by states that have a nationalist approach, or by countries like Venezuela, Iran or Iraq, which have long had oil production. Under this type of agreement, the host Member State is merely terminating the service of an oil company or consortium in order to benefit from its financial and technical know-how. The company or consortium assumes risk and responsibility and is reimbursed by a service fee that is usually paid in cash. An example of this type of agreement is the absence of Iran`s buy-out agreements, which have proved too painful to be considered by a private investor.

These three types of agreements are explained in the following sections. Once the principles of the agreement have been defined, the standard contract will have to be detailed to take into account the specific issues and conditions associated with each project. Three types of fundamental and alternative agreements generally determine the relationship between government and investors. Under concession agreements (or licenses), the selected refining company or consortium conducts exploration activities. The company takes over all of the production, when it is extracted, in return for the payment of a royalty to the host state. Royalties could be in cash or in kind. It could also take the form of a income tax or other types of fees and contributions, possibly including an additional income tax, if it exceeds a pre-defined threshold. This type of contract is called a licence and generally gives the licensee the exclusive right to explore and value oil, own and market production, and own the corresponding equipment and facilities. Professionals, even some with years in the oil and gas sector, are often unaware of the legal and commercial issues related to the life cycle of hydrocarbons and how they can influence the economic viability of a project.