1. Oil and Gas
Legal Issues
Presentation
Group Members: Stephanie Polykarpou, Thelys Stamatelis, Lianqiu
WANG, Quan Ke

2. Theme:
“Choosing between Production Sharing
Contracts, Joint venture and Service Contracts
presents formidable intellectual challenges as
to optimal and legal drafting considerations.
Critically discus citing typically clauses and
risk issues that may arrive”.

3. Content
 Introduction
 Joint Venture
 Product Sharing Contract
 Service Agreement
 Conclusion

4. Introduction
 Definition of the “Contract ”
 Definition of the “Oil and Gas Contract”
 Types of The Oil and Gas Contract
 Cut-in Angles of the Oil and Gas
Contract
• Concerns of the Contractual Clauses
Currently
• Contracts Forms vs. Revenue Sharing

6. Joint Ventures
 Background
1. Definition
2. Reasons to choose the JV

7. Joint Venture
Upstream Downstream
Capital Supply Chain
Intense Optimization
Market Position
Risk
Concerntrate Regulation
requirement
Access to
Resources
Political Sensitive
or Energy Security
Access to
Technology

8. Development of the JV
Past Current Future

9. Joint Venture
 Types of JV
1. Full assets JV
2. Full business JV
3. Market Alliance

10. Special Clauses in Joint
Venture
 Financial/Capital Management of Partners
 Taxes

12. Production Sharing
Agreements
1. In 1960s Indonesia proclaimed PSCs as the main type of
contract in the oil and gas industry.
2. Nowadays more than 40 countries use this type of contract.
3. The state is usually represented by the government or by a
National Oil Company

13. Production Sharing
Agreements
Characteristics.
• Exploration remains with the
government
• State has managerial role
• IOC responsible for costs
• Profit oil is divided between the
contractor and the state

14. Production Sharing
Agreements
5. Certain clauses:
• Tax
• Contract duration and commerciality
6. In such contracts there always are
some risks:
• The host state does not own any risks
at all
• But.. the intervention of the law
• The host state also incurred some
disadvantages.

16. Service Contract
 The background of Service Contract
 The type of service contract
 Risk service contracts(Rsc )and Pure service
contracts (Psc)
 Differences between Rsc and Psc

17. Service contract
Service Contract
Pure Service Contract (PSC) Risk Service Contract (RSC)
Ownership Control Risk Ownership Control Risk
Foreign Oil No No No No No Exploration
Company
Host State Full Full All Risks Full Full All Risks

18. conclusion
 JV vs. Service contract
 JV vs. PSC

19. References
 Outlines of the Presentation of Dr. Irina Paliashvili, the President of the
Russian-Ukrainian Legal Group at the Seminar on the Legislation on
Production Sharing Agreements, September 14,1998
 Kirsten Bindemann, Production Sharing Agreements: An Economic
Analysis, Oxford Institute for Energy Studies WPM 25, October 1999
 Centre for Energy Economics, Bureau of Economic Geology, Jackson
School of Geosciences the University of Texas at Austin
 Bake and Makenzie, Production Sharing Contracts: Implications for Pre-
Salt Development in Brazil
 Dr Ingilab Ahmadov, Contracts and Revenue sharing mechanisms- an
international perspective, Public Finance Monitoring Centre (Baku), 5-6
February 2009,
 Jenic Radon, The ABC of Petroleum Contracts: Licences-Concessions
Agreements, Joint Ventures, and Productin Sharing Agreements, 70

20. ….references
 Talal Al-Emadi Joint Venture Contracts among current Negotiated Petroleum Contracts (2004)
 Bindemann ̧ supra note 15, at 11, (“oil exploration and development can only be conducted by
virtue of one of several forms of contracts granted either by the government or its NOC”).
 With respect to the type of remuneration, the payment can be regarded as profit or fees. The
method of the remuneration, on the other hand, is either a percentage of the production (in kind)
or fixed amount (cash). D. Johnston Production Sharing Agreement‟ cEnTrE For PETrolEum min.
l. & Pol‟y. 1, 1–68 (1994).
 M Sa Riberio, The New Oil and Gas Industry in Brazil: An Overview of the Main Legal Aspects 36
TEx. inT‟l. l. J. 141, 143–65 (2001).
 Michael Likosky, Contracting and regulatory issues in the oil and gas and metallic minerals
industries (2009)
 Omorogbe, Y. (1997). The Oil and Gas Industry: Exploration and Production Contracts. Lagos:
Malthouse Press. Page 60-67
 Neto, J.S.C. (1985). „Risk-bearing service contracts in Brazil”, Journal of Energy and Natural
Resources Law 3: 114.
 Smith, E.E. (1991-2). “From concessions to service contracts”, Tulsa Law Journal, 27,
 p. 493.
 Smith, E.E., Dzienkowski, J.S., Anderson, O.L., Conine, G.B., Lowe, J.S. and Kramer, B.M.
(2000). International Petroleum Transactions. Colorado: Rocky Mountain Mineral Law Foundation
(2nd edition).