An Investigation into Contractual Relationships between the Governments and Middle Eastern Oil Companies (2012)
Contractual Relationships Business Law Dissertation – Since Edwin Drake drilled the first successful oil well in Pennsylvania in 1859, the oil and gas industry has been a key component of the world economy. Commencing with a few players, nowadays there are many participants in mineral development of oil and gas as a result of the increasing dependency upon petroleum products worldwide. Historically, the oil and gas industry had experienced a period of total dominance by seven international oil corporations, known as the Seven Sisters, for many decades.
The mastery of these companies encompassed the major aspects of oil and gas industry, including producing, refining, transporting and marketing the products. Owing to the lacking of the financial resources as well as the requisite technology and expertise at that era, the host countries have compelled to rely heavily upon the Seven Sisters for the development of their petroleum resources.
At that time, the legal framework, in which the oil production was authorised, had determined by means of concessions concluded between the governments and the Seven Sisters. The social and political circumstances, under which these contracts were agreed upon, were more favourable for the Seven Sisters. This can be observable in the scope of the rights granted to them. Host countries, on the other hand, had been deprived of all direct or indirect participation in their petroleum developments and their role was confined, to some extent, to collect the agreed royalty payments.
Yet, in the wake of discovering vast reserves of oil, during the decades of the sixties and seventies, many of the petroleum exporting countries tended to wield greater influence on the policies and operations of their concessionaires. Therefore, they renegotiated its original concessions, often under change circumstance doctrine, both individually or combined under the umbrella of Organization of Petroleum Exporting Countries (OPEC). At present, although some host countries still fulfil their concessions, the terms and conditions of these agreements are significantly different form the original ones.
The fundamental structural changes entered into the contract had totally restructured the traditional concession relationship. As a result, modern concessions, based partly or entirely upon participation, have been adopted. This Dissertation has examined to some extent the evaluation of the upstream petroleum agreements concluded between Middle Eastern governments and Oil Companies since 1900 till 1990. The on-going modifying of the clauses and provisions in these agreements reflects, in effect, the political, social and economic changes witnessed by the international oil industry since it was infant and till the present.
- 11,000 words – 36 pages in length
- Outstanding use of literature
- Expertly written throughout
- Outstanding piece of work
- Ideal for business law students
1: Petroleum Concession System
Emergence of The Seven Sisters
The Sisters and the Middle Eastern Host Countries
Legal Aspects of Concession Agreements
2: The Road to Participation
The Host Countries’ Attitude
The Renegotiation Process
From Royalties to Profit Sharing Agreement
The Rise of OPEC
Causes of the Alliance
OPEC: Origins and Aims
OPEC and the Participation Agreement
Legal Aspects of participation Agreements
3: Comparative Analysis (Original Concession vs. Modern Concession)
Methods of Obtaining a Concession
Parties to the Contract
Contractual Relationships, Rights and Obligations
Scope of Right Granted
Duration of the Concession
Financial Benefits Gained