5. The types of upstream oil contracts with traditional state concession contracts prior to 1940 were granted to large areas, sometimes throughout the country, for example. B Iraq. These grants were long-term (50 to 99 years). The IOC has had all the discretion and control to explore and verify whether or not a particular field can develop. Risk service agreements are the least used type of contract among the three listed here. 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. The oil and gas industry operates in countries around the world in accordance with a number of types of agreements.
These agreements can generally be categorized into one of four categories (or a combination of categories): risk agreements, concessions, production sharing agreements (PSA, also known as production sharing contracts, PSCs) and service contracts. All three types of oil contracts are usually signed between an oil company or consortium and the government. As a general rule, they settle the following areas: examples of service agreements adopted and areas covered by production-sharing agreements do not confer ownership rights over oil production to the company or consortium that concludes the agreement. Instead, the company receives a share of the total production. The production balance sheet belongs to the host state. Participation agreements: the NOC is “carried” by an international oil company (IOC). The NOC weighs on the IOC by not fully compensating the IOC for the risks involved in exploration or for making a commercial discovery. The IOC suffers the total losses and therefore needs greater success to compensate, depending on NOC`s share, in the joint venture. But the IOC benefits, for example, from the fact that the NOC is treated as a partner in nationalist treats. For each phase of an upstream oil project, several different legal contracts are required, the exact mix of which depends on the project specifications, including the type of field, project participants and planned implementation work. Below is a brief overview of the most common trade agreements that have been found at each stage of a typical oil project upstream of the UKCS. Related financial agreements, necessary in connection with an upstream oil project, and asset acquisition and disposal agreements on the UKCS are not within the scope of this note.
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. This did not result in delays, postponements or investments expected immediately. This was clearly contrary to the interests of host governments. Treaties do not provide for waivers of unexplored areas. Other more traditional concession agreements have granted the IOC “in situ” oil, with market and price powers.