The ABCs of Petroleum Contracts: License-Concession Agreements, Joint Ventures, and Production-Sharing Agreements
It is in the interest of natural resource–rich countries to use their resources to obtain funds for social and economic development. To do so, many governments enter into contracts with foreign companies to develop and sell their oil or gas. Negotiating the right contract is vital to a government’s efforts to reap the benefits of its natural resources.
This chapter will focus on the different types of contracts that are standard in the industry while also addressing the important public interest concerns that are too often neglected in contract negotiations. By reporting on these issues, the media can help inform public debate about what kind of contracts are best for their country.
Governments have three options to develop their natural resources: They can create state companies for exploration, development, and production, as in Saudi Arabia, Mexico, Venezuela, Iran, and Oman. They can invite private investors to develop the natural resources, as in the United States, United Kingdom, Russia, and Canada.