LEGAL ASPECTS of the

OIL & GAS INDUSTRY

a presentation to partners and staff of Norton Rose by

HEW R. DUNDAS of

DUNDAS ENERGY SERVICES
International Petroleum Law and Risk Management Advisers
2
nd
April 2003
OVERVIEW of PRESENTATION
History, Geography & Politics
Structure of the Industry
Technical Features
Environment, Safety and Regulation
Finance, Taxation and Insurance
Oil Industry Agreements
Life Outside Documents
Dispute Resolution
Conclusions
HISTORY
4,000 BC or earlier
Col. Drake (Pennsylvania- 1859)
The Major Discoveries
Stop Drilling Now !
There Is No Oil In The North Sea (1959)
The Prize by Daniel Yergin
1958/1982 LoS Conventions
GEOGRAPHY
Locations Inconvenient
Boundary Issues
International Pipelines
Tankers
Jurisdictional Issues
NIMBY
POLITICS
Cross-Border/Regional
Major Economies without Indigenous Oil
Net Exporters/Importers
Perceptions of US Foreign Policy
Electioneering Football
Chancellors Goody-Bag
Tabloid Target
STRUCTURE of INDUSTRY
Upstream/Downstream/Midstream
Pipelines & Transportation
Integration vs Independence
Standard Oil
Gas is NOT Oil
Power is Neither
TECHNOLOGY
Innovation
Cost Efficiency
Designers vs Constructors vs Operators
Recovery Rates
Climbing Mount Everest
Keep It Simple, Stupid
ENVIRONMENT, SAFETY
& REGULATION
Sea Gem/Piper Alpha
Goal-Setting vs Prescription
Exxon Valdez/Braer
Brent Spar
Over-Regulation/Ignorant Regulators
Political Correctness
OIL INDUSTRY AGREEMENTS
Petroleum Agreements
JOAs and Related Agreements
Service Contracts
Negotiation Techniques and Strategies
Relationship Management
Dispute Resolution
PETROLEUM AGREEMENTS
Passage of Title
Royalty Agreement
Production Licence
Concession Agreement
Risk Service Agreement
Production Sharing Agreement
Relationship Management
JOAs & OTHER AGREEMENTS
History of the JOA
US vs UK Models
AIPN/Other Model Forms
Relationship Between Parties
Assignments/Novations &c
Farm-Ins etc
SERVICE CONTRACTS
Cyclical Nature of the Industry
Use of Model Form Agreements
Sub-Contractors
Cultural Changes 1978-2003
Partnering
Turnkey + Equity Participation
NEGOTIATIONS
Rights vs Interests
Co-Operation not Confrontation
Ruritania is NOT England/US
Legal Principles May Be Subsidiary
Relationship Management
EXTERNAL LAWYERS
Who ? Why ?
Added Value ?
Specialist Expertise
Client Must Control
Some Disasters
RELATIONSHIP
MANAGEMENT
Long-Term Contracts 25+ Years
Contrast UK Construction Sector
Change in Opposite Number
Co-Operation Not Confrontation
What are your problems ?
How can WE deal with this ?
DISPUTE RESOLUTION
Dispute Avoidance/Prevention
Why Litigate ?
ADR largely ignored
Non-Mediation ADR
Mediation Becoming Over-Formal
Energy Arbitrators Panel
CONCLUSIONS
Essential Technical Knowledge
Need Practical People
The Oil Barons Club
The PR Wars
Dispute Prevention
Lord Hoffman is NOT an Engineer