Due to the diversity of ownership of oil and gas interests and/or the need to share economic risks, the oil and gas industry has entered into a number of different contractual agreements. The most common types of contracts are farm outs-farm-ins or commercial well agreements and common enterprise agreements. This tender takes into account the options that can be made available to the parties prior to litigation, as well as the types of litigation that may arise, particularly in an arbitration context, as many of these purchase and sale contracts contain arbitration agreements. These farm out agreements are usually concluded in an undetectable form of mail order arrangement, which generally contains provisions regarding: the change in the price of the contract or the price formula should be a key factor for many stakeholders. As a general rule, price adjustment clauses provide for good faith discussions between the parties, followed by an arbitration procedure or, alternatively, expert advice if the parties fail to reach an agreement. If the contract price or price formula cannot be adjusted by mutual agreement between the parties, a party`s ability to impose an adjustment of the contract price depends heavily on the exact language of a price review clause. If there is a right to trigger the contractual price review mechanism, the parties will inevitably consider whether the difference between the contract price and the market price warrants a price review. At this point, some considerations come into play, such as. B the question of whether the contract provides for the maintenance of the difference for a minimum period, whether there is a minimum level of contractual difference or whether the price difference should be assessed on the basis of other markets. This paper examines the energy strategy and oil and natural gas taxation systems of eight major oil and natural gas producing countries that have either adopted an amendment to a service contract or expressed an interest in this framework as an alternative to production-sharing contracts for the period 1990-2014.
In particular, we look at the differences between service contracts between countries and examine the differences between these service contracts. A service contract is a long-term contractual framework used by some host governments to acquire the know-how and capital of international oil companies without having to give them production and land rights.