Armin Hohenadler

Participation agreements: the NOC is „supported“ by an International Oil Company (IOC). The NOC weighs on the IOC by not fully compensating the IOC for the risks assumed during exploration or commercial discovery. The IOC is facing significant losses and therefore needs greater success to compensate for this situation based on the NOC`s share in the joint venture. However, the IOC takes advantage, for example, of the fact that it has the NOK as a partner when confronted with nationalist treats. In addition to the farm-out compliance structures mentioned in the AIPN model, oil and gas companies are becoming increasingly commercially creative. Counterpart structures may include, for example, that the new model aipn agreement refers to the capping of the cost of transferred labour that the farmer must pay, which is a point of commercial negotiation. If there is no cap, the parties may want to clearly define what is and what is not and how decisions that may affect costs will be made. For example, the parties may negotiate whether or not the unforeseen costs of cleaning up the environment following a spill are within the scope of unlimited transportation. Parties may also wish to consider how third parties, such as.B drilling companies, will be mandated and paid. Any producer who carries out a transport also wants to ensure that transport payments can be set off (or recovered) with the rate applicable to its tax liabilities, which may affect the structure and organisation of payment rules. (v) Should the carry be used for a given period of time? In June 2019, the Association of International Petroleum Negotiators (APPOINTING) published a revised version of its model form for an international farm-out agreement.

The publication of this new model agreement reflects the increasing sophistication and continuous evolution of the agricultural market. In our experience, parties to farm-out agreements focus their due diligence activities and negotiations (in addition to the counterparty structure) on key issues such as: Traditional concession contracts before 1940 were granted to large territories, sometimes to the whole country, for example. B Iraq. These grants were long-term (50 to 99 years). The IOC had complete discretion and control to explore and whether or not to develop a particular field. For some transactions, the counterparty is limited to financial payments (as a lump sum and/or as a routine obligation to finance part or all of the farm`s share of the costs – known as a „carry“). Farm-out agreements do not usually consist of a contractual vacuum. When there is more than one owner of an asset, they usually settle their relationship with that asset under a joint venture agreement.

Farm-out agreements should take into account these agreements relating to joint operations (as well as current legislation and all other relevant contracts) and interact with them in an appropriate manner in order to avoid inconsistencies and minimise the chances of litigation.. . . .