Upstream International Petroleum Agreements

Question 1

UGPC

Answer 1

Upstream Government Petroleum Contract

Question 2

HG/HC

Answer 2

Host government / host country

Question 3

IOC

Answer 3

International oil company

Question 4

NOC

Answer 4

National oil company

Question 5

PSA

Answer 5

Production sharing agreement

Question 6

JOA

Answer 6

Joint operating agreement

Question 7

What are two types of petroleum agreements

Answer 7

1. Host government contracts between private investors and host governments or national oil companies
   - concessions, licenses, risk services contracts
2. Private investor contracts where private parties engage in O&G exploration and production activities
   - NDA, farm-in farm-out, JOA

Question 8

Why a HG engages in UGPC

Answer 8

Attract risk capital
Attract modern technology
Profit from investment

Question 9

Why would a contractor engage in UGPC

Answer 9

Sufficient return on investment
Sufficient profits to cover unsuccessful exploration elsewhere
Risk dispersal

Question 10

Characteristics of a concession / license ( UGPC)

Answer 10

Right to explore and produce
Exchange of royalties based on production
No work commitment
Very little or no control by HG

Question 11

Characteristics of a production sharing agreement

Answer 11

HC receives share of production obtain from the area granted
Contractor subject to work obligations
Greater degree of HG control assuring sustainable and environmental exploitation

Question 12

Characteristics of a risk service contract

Answer 12

HC retains greatest degree of control over its reserves
Contractor only obtains rights to perform exploration and production SERVICES in exchange for a fee for service
HC assumes no exploration risk and receives full ownership of production

Question 13

Why use a stabilisation clause

Answer 13

Stabilisation clauses are introduced to reduce political risk and preserve the fiscal regime in international petroleum contracts

They should have an international anchor

Question 14

Features of stabilisation clauses

Answer 14

Protect private investors by restricting legislative or administrative power
Stability of key conditions that have bearing of ROI
Protect against future changes in the law which would negatively affect ROI

Question 15

Modern hybrid stabilisation clause

Answer 15

Define circumstances to trigger renegotiation
Indicates the effect of the change on the contract
Outline objective and method of renegotiation
Provide solution if renegotiation fails

Question 16

HGC

Answer 16

Host Government Contract