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

2nd 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