Mastering Oil and Gas Commercial Contracts

• Course objectives and overview
• Agenda
• Expectations

 The Nexus of Commercial Contracts in Oil and Gas Investment

• Oil and gas project contractual structure - from the investors' perspective
• Negotiating an oil and gas contract: hierarchy of agreements
• Managing a negotiation - structure
• The fundamentals of negotiating an oil and gas commercial contract

Government Fiscal Terms and Agreements with Investors

• Economic rent and how to collect it
• Optimum tax systems
• Government versus investor objectives
• Designing a licence or contract system
• The concession system
• Production sharing contracts

 Joint ventures with national oil companies

• Criteria for award of licences and contracts Joint Ventures in the Oil and Gas Business
  Exercise: why are joint ventures used?
• Course delegates investigate the advantages and disadvantages of joint ventures in the oil and gas business:
  – How joint ventures are set up
  – The various types of joint venture
  – Legal aspects
  – Effective joint ventures
  – The national oil company as a partner
  – Major issues

Governance of Joint Ventures: Joint Operating Agreements

• The purpose of the JOA
• The JOA structure
• The content of a JOA
• The operator and operating committee
• Unitisation agreements and cross border treaties
  Exercise: understanding the main clauses of a JOA
• Delegates analyse 1 or 2 clauses of a JOA and present back to the group.

Transportation and Processing Agreements

Exercise: identify the major terms on a T&P term sheet

• Delegates split into groups to consider the perspectives of the oil pipeline owner and the oil shipper in a typical transportation and processing agreement.
• The remainder of the course is a series of 3 exercises based around fictional oil and gas companies in a fictional country.  Course delegates break into groups to carry out 3 negotiations, each following a logical sequence of events:
  – Production Sharing Contract
  – Joint Operating Agreement
  – Gas Sales Agreement
• During each of these negotiations course delegates develop their negotiating skills through learning about and practicing:
  – Preparing for a negotiation
  – Carrying out the negotiation
  – Closing the deal

Production Sharing Contract Negotiation

Exercise: negotiate the main commercial points of a PSC

• Delegates break into groups and take on the roles of the national oil company and the oil and gas investor in a production sharing contract negotiation. The focus is on the preparation required for a negotiation.
  – Understanding the respective parties' requirements and their ability to trade
  – Establishing the point at which a proposal becomes unacceptable
  – Opening the negotiation
  –  Organising the meeting

Other Agreements

Other types of commercial contract used in oil and gas are presented

• Farms In/Out
• Decommissioning
• Financing
• Procurement

Joint Operating Agreement Negotiation

Exercise: negotiate the main commercial points for a JOA

• Delegates break into groups and take on the roles of the joint venture partners in the negotiation of a JOA. The focus is on how to manage a negotiation:
  – Building a relationship with the other party
  – How to make proposals
  – How to trade
  – The power of listening and knowing when to stay silent
  –  How to handle disagreement amongst the parties

Gas Sales Agreement Negotiation

Exercise: negotiate the main commercial points for a GSA