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Joint Ventures & Alliances in the Upstream Petroleum Industry

  • Course Instructor

    Dennis is an international legal expert in petroleum law who is based in United Kingdom. He is a qualified lawyer in the United States as well as UK and New Zealand and has been listed in the Guide to the World’s Leading Energy and Natural Resources Lawyers. He has received the degrees of Juris Doctor from the University of Wyoming and LLM-Energy Law from the University of Utah.


Joint ventures, alliances & strategic investments have become common transactions in all sectors of the Energy Industry, whether at the level of project sponsors or between service contractors. These transactions are most frequently employed where the participants consider that a successful outcome is best achieved under an arrangement that spreads risk, incorporates know-how or satisfies local content requirements. Most frequently, these arrangements occur at the project level, however, so-call ‘global’ alignments are becoming more common.

Under these arrangements the participants retain their separate ownership and management. These considerations, as well as the contribution of human, technical and financial resources from each participant, are determined through assessment and planning. Often these discussions are preceded by a solicitation for an expression of interest or competitive tender. Selection is based on an assessment of critical factors most relevant to the successful performance of the project. There is also a growing trend in many emerging economies for a ‘local content’ requirement as a means for the transfer of know-how and to create opportunities for domestic enterprises.

Special provisions for allocation of risk and reward based on goals related to cost, schedule, performance, safety and environmental care add another dimension to these arrangements. In addition, specific issues regarding funding, and accounting and auditing are incorporated into the documentation. Finally, specialised methods of financing based on securitisation of assets and cash flow have evolved to suit nature of these types of projects.

Day 1

Introduction

  • Business case
  • Strategic motivation and alignment of interests
  • Operational considerations
  • Risk/ reward sharing
  • Local content requirements
  • Process
  • Direct negotiation
  • Expression of interest
  • Competitive tenders
  • Documentation
  • Preliminary documents, heads of agreement, memorandum of understanding, term sheet
  • Definitive agreements – project or global relationships

Case study: Strategic alliance between national oil company and international oil company


Day 2

Frameworks

  • Unincorporated joint ventures
  • Formation
  • Carried interests of national oil companies
  • Mandatory work programmes & budgets
  • Sole risk operations
  • Exploration farm-in
  • Farmee’s obligation
  • Farmor’s back-in rights
  • Unit production operating agreements
  • Unit agreement
  • Participation factors
  • Joint venture companies with shareholder agreements
  • Formation
  • Voting arrangements
  • Transfers & assignments
  • Withdrawal
  • Bidding alliances
  • Work packages
  • Contractor selection
  • Strategic alliances
  • Critical factors for success
  • Project or global alliances
  • Strategic investors
  • Management & operations
  • Conversion rights


Day 3

Planning & Management of Operations

  • Work programmes
  • Mandatory
  • Optional
  • Operations by less than all parties
  • Management
  • Committees
  • Operatorship
  • Secondments
  • Technology transfer
  • Licenses
  • On the job innovations
  • Risk & liabilities
  • Indemnities between parties
  • Third party liability
  • Use of insurance


Day 4

Finance & Taxation

  • Financing
  • Cash calls & remedies for default
  • Structuring non-recourse
  • Equity contribution
  • Step-in rights for default
  • Accounting
  • Special accounting procedures
  • Classification of expenditures & revenue
  • Auditing
  • Audit of operator
  • Audit of contractor
  • Audit procedure


Course summary and close

  • Dennis is an international legal expert in petroleum law who is based in United Kingdom.  He is a qualified lawyer in the United States as well as UK and New Zealand and has been listed in the Guide to the World’s Leading Energy and Natural Resources Lawyers. He has received the degrees of Juris Doctor from the University of Wyoming and LLM-Energy Law from the University of Utah.

    In his thirty years of practice, Dennis has been the chief legal officer for Sinclair Oil Corporation in the US, and the Petroleum Exploration Corporation of New Zealand. He has also worked as an adviser on law and negotiations regarding petroleum resource development, pipeline transportation and fuel purchase contracts to Petrobangla, PetroVietnam, Kazmunigaz, Cambodian Petroleum Authority, Perusahaan Gas Negara (Persero), Gas Authority of India, Papua New Guinea Department of Mines and Petroleum, Philippines National Power Corporation and the Sri Lanka Petroleum Resources Development Secretariat.

    Dennis has also been a consultant to the Asian Development Bank, The World Bank and the European Investment Bank on petroleum sector policy, project financing for oil and gas development and crossborder gas trade all over the world. He was the legal adviser to four West African governments for the West African Gas Pipeline Project and was appointed as an adviser by the US State Department and Department of Commerce on gas pipeline projects in Azerbaijan and Bangladesh. He is a Member of the Global Faculty for the Centre for Energy, Petroleum & Mineral Law & Policy at the University of Dundee. He is the course author of International Comparative Petroleum Law and has published A Framework for Negotiating and Documenting International Petroleum Transactions and A Framework for Negotiating and Managing Gas Industry Contracts.

    Dennis' research in the field of petroleum law has been published in the Land and Water Law Review, Tulsa Law Journal and Journal of Comparative and International Law. He is a Distinguished Visiting Professor on Insurance Law and Oil & Gas Law at the University of Wyoming.

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