Oil & Gas Commercial Contracts and Negotiation Skills

Overview

The oil and gas industry operates within a complex contractual and technical landscape, characterised by significant capital investments and various associated risks and uncertainties. Additionally, geopolitical events often exert considerable influence over this sector.

In this training course, you will explore:

• Fundamentals of oil and gas exploration, production, and the economics of oil and gas recovery to develop a comprehensive understanding of the industry and its critical contractual terms.

• The diverse categories of petroleum contracts and their essential characteristics, including the roles and responsibilities of the contracting parties.

• Rights and obligations of stakeholders, including national oil companies, international oil companies, and host governments.

• Evaluation of the extensive financial instruments used in oil and gas industry contracts, along with the fiscal strategies that impact the profitability of each party.

• How profitability considerations incentivize investment and reinvestment throughout various stages of oil and gas exploration and production.

• The importance of negotiation skills, conflict avoidance, and effective negotiation preparation in achieving successful agreements.

TRAINING OBJECTIVES

By the end of this course, participants will:

• Gain a comprehensive understanding of the essential factors in the oil and gas business.

• Enhance their knowledge of the fundamentals of oil and gas law and commercial contracts.

• Evaluate the technical, commercial, and financial aspects of oil and gas contracts and their influence on profitability.

• Confidently converse about technical terms, concepts, and industry-specific terminology with peers and clients.

• Master negotiation skills to lead and influence successful business agreements.

WHO SHOULD ATTEND?

This course is suitable for:

• Business Development Managers seeking opportunities in various countries.

• Negotiators and Contracting Professionals.

• Corporate Planning Professionals.

• Professionals such as legal, environmental, banking, insurance, finance, and tax advisors working on oil and gas production sharing, oil concession, and Joint Venture contracts, analysing suitable fiscal regimes.

• Geologists, Geophysicists, Petroleum Engineers seeking to understand different fiscal regimes in commercial contracts.

• Supply Planners and Scheduling Professionals.

• Government Regulators.

• Auditing Personnel.

• Compliance Officers.

• Equity Analysts and Bankers.

• Joint Venture Officers.

TRAINING APPROACH

Participants will actively engage with the course material during the Oil & Gas Commercial Contracts and Negotiation Skills training through the use of training materials, real oil and gas contracts, case studies, quizzes, training videos, and discussions related to business cases involving different fiscal regimes in production sharing, oil concession, and service contracts in their respective organizations. Negotiation skills will also be a focal point of the training.

TRAINING OUTLINE

Day 1: Introduction to Legal, Fiscal, and Contractual Fundamentals

• Crude Oil & Gas

• The Oil Industry Streams

• Demand Drivers for Crude Oil

• Drilling Contracts – Contract Alternatives

• Legal Fiscal and Contractual Framework Ownership

• Oil and Gas Rights and Ownership – The Ad Coelom Doctrine

• The Rule of Capture

• A Rule of “No liability”

• Limitations to Rule of Capture

• Theories of Ownership – Escaped Hydrocarbons

• Drainage by Enhanced-recovery Operations

• Doctrine of Correlative Rights

• Conservation Laws – Drilling Wells

• Conservation Laws – Fair Share Doctrine

• Function of Oil and Gas Conservation Laws

• Well-Spacing Rules

Day 2: Introduction to Contracts

• Kinds of Oil and Gas Interests

• Fee Interest

• Mineral Interest

• Leasehold Interest

• Surface Interest

• Royalty Interest

• Production Payment

• Carried Interest

• Other Interests

• Key Stages of Petroleum Projects in View of Contracts

• What is a Petroleum Contract

• Need for Collaboration between parties

• What is a Petroleum Contract?

• Host Government Contract

• Petroleum Fiscal Regime defined

• Petroleum contracts under different regimes

• Awarding or winning contracts

• Types of Petroleum Contracts and their Key Attributes

• Upstream Project Agreement

• Host Government Take

• An example of Concessionary System’s Cash Flow

• Optimal Government Take

• PSC – Cash Flow Distribution

• PSC – CF Distribution Example – Year N+1

• Comparison of Fiscal Systems

• Flexible Fiscal Regimes

• Why Dynamic Terms are used in Contracts

• Joint Ventures and Other Combinations

Day 3: Roles, Responsibilities and Fiscal Tools

• Dissection of Petroleum Contracts

• The document follows the events of the project

• Order and Disorder in the Clauses

• Parties Roles and Responsibilities in Petroleum Contracts

• The General Framework of parties involved

• National Oil Company Multiple roles

• International Oil Company Role

• Grants of Rights to a party – Contractor and Host Government

• Rights and Obligations of Host Government

• Addressing important operational issues in the contract

• Contract Area or Block

• Time periods in contracts

• Minimum Work Obligations in Exploration Phase

• Relinquishment of Unused Area to Government

• Discovery, Appraisal, Declaration of Commerciality and Development

• Post Commercial Discovery – A Field development Plan

• Annual Work Programs & Budgets – Petroleum Contracts

• Joint Management – Petroleum Contracts

• Deadlock – Petroleum Contracts

Day 4: Strategies and Solutions

• Fiscal Strategies and Solutions

• Intro to Fiscal Strategies and Solutions in PSC

• Strategies for the State to meet their Profitability

• The 4 Key Questions that Define the Strategy

• The Changing Profitability – Due to Prices, Costs, Production Rates

• Understanding the Regressive, Neutral & Progressive Fiscal Tools

• Approaches to Profitability

• Profitability And The Fiscal Tools

• Timing of Petroleum Revenues – Fiscal Tools

• Risk for The State – Fiscal Tools

• State Participation as a Co-Investor

• Encouraging Investment and Re-Investment

• The Shift to Unconventional Oil & Gas

• Gas and LNG Contracts

• The Distinct Characteristics

• Liquefied Natural Gas Business

• Liquefied Natural Gas – Contracts

• Gas Sales and Transportation Contracts

• Gas Transportation Tariffs

• Gas Sales

Day 5: Negotiation Skills

• Introduction to Negotiation: Understanding its significance in oil and gas contracts.

• Conflict-Negotiation Link: Examining the connection between conflicts and negotiations.

• Team Roles: Identifying key roles in negotiation teams.

• Pre-Negotiation Prep: Setting objectives, research, and strategy.

• Effective Negotiation Process: Steps, techniques, and practical tips.

• Success Factors: Exploring leverage, timing, and communication.

• Conclusion: Finalising agreements and documentation.

Certificate of Completion: Upon successful completion of the course, participants will receive a Certificate of Completion from Al-Majd Pathways Centre (APC).