The Essentials of Oil and Gas Commercial Contracts and Negotiations Training Course

The course is highly practical and interactive. It will develop the manager and senior professional by providing an understanding of the array of commercial contracts that are applied in the oil and gas industry. You will leave with a sound grounding in how these contracts relate to one another and how they are negotiated. This is a business training programme focusing on the commercial side rather than the technical side of contracts. There will be ample opportunity to learn about and practice negotiations throughout the programme.  Unlike other courses in this field you will not spend endless hours going through contracts clause by clause and line by line. Instead, the emphasis is on the business and commercial issues that are generated by contracts and how they relate to one another - limited detailed clause review is used to reinforce this.

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Introduction

• 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 three exercises based around fictional oil and gas companies in a fictional country. Course delegates break into groups to carry out three 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

• Delegates break into groups to take on the roles of the operator of the joint venture group and a gas utility in a gas sales agreement negotiation. The focus is on how to close a negotiation:
  - How to close the deal
  - Recording what is agreed in writing
  - Ensuring the continuing success of the business relationship
  - Price risk and volume risk sharing characteristics of a gas sales agreement

Over three intensive and interactive days you will:

• Gain a comprehensive understanding of how different types of commercial contracts relate to one another in an oil and gas investment.
• Grasp the critical commercial and business implications of global oil and gas contracts.
• Learn robust strategies and techniques for improving the negotiation phases (including negotiations after a contract is signed)
• Develop a practical framework for dealing with joint venture agreements.
• Understand the key and current nuances between government and investor agreements.