Types and Features Of International Petroleum Contracts

Zuhairah Ariff, Abd Ghadas and Sabah, Karimsharif (2014) Types and Features Of International Petroleum Contracts. South East Asia Journal of Contemporary Business, Economics and Law, Vol. 4 , Issue 3 (June), 4 (3). pp. 34-41. ISSN 2289-1560

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Abstract

All over the world, the oil producing countries sought to extend their control over natural resources and attempted to regulate this lucrative sector by contractual documents or by legislation. The petroleum operation involved high risk, big expenses and investment and cannot be run by one party. By entering into an appropriate contract, the parties can reduce the risk and share the costs which are required for exploration, development and production activities. Understanding the contracts and being able to analyze the contracts are important to estimate and mitigate risks in the petroleum business. Example of common contracts which had been developed and used by the host state (HS) and international oil companies (IOCs) in the petroleum industry are the concession contract, production sharing contract, service contract and joint venture contract. This article discuss the features and types of the four common international petroleum contracts and highlight the importance of the contract in balancing interest of the host state (HS) and international oil companies (IOCs)

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