The Interpretation of Legal Terms About Contractual Obligations of the Parties in an Oil or Gas Exploration/Extraction Contract

Topics: Petroleum, Natural gas, Contract Pages: 20 (6820 words) Published: December 1, 2012
Kavala Institute of Technology
MSc in Oil & Gas Technology


Andreou Christos
Georgiou Manolis
Kakanis Iordanis
Skarvelas Stathis

Supervisor: Pr. K. KalamboukaNovember 2012


The purpose of this assignment is to identify the contractual obligations of the parties in oil and gas exploration and extraction contracts. The assignment is based on the contract between Cyprus Government and the authorized company as is approved by the Cypriot Parliament and is harmonized to “Directive 94/22/EC of the European Parliament and of the Council of 30 May 1994 on the conditions for granting and using authorizations for the prospection, exploration and production of hydrocarbons”


Introduction 4 1. Conditions and requirements for granting authorizations 4 2. General and specific information submitted by the applicant 5 3. Grant of an authorization 5

4. Duration of an authorization for prospection 6
5. Duration of an authorization for exploration 6
6. Relinquishment of area 6
7. Duration of an authorization for exploitation 7
8. Grant of rights to the holders of authorizations 7 9. Transfer of an authorization or assignment of rights arising from an authorization 8 10. Control of a holder of authorization by a third country or a national of a third country 8 11. Work practices 8

12. Directions of the Minister to holders of an authorization in case of contravention of Regulation 11 9 13. Drilling operations10
14. Protection of the environment11
15. Construction and maintenance of installations, pipelines and related equipment12 16. Measurement of hydrocarbons14
17. Authorized officers15
18. Unit development16
19. Records17
20. Reports17
21. Hydrocarbons production records19
22. Obligations in case of termination of an authorization20 23. Confidentiality20
24. Powers of the Court for seizure and confiscation21 25. Abandonment21
26. Abandonment of the well22
27. References23


Oil and gas contracts are shaped by national and international laws that relate to common industry transactions.  With standardized contracts being used across different jurisdictions, it is important that these legal principles are properly understood.  The increasing scarcity of natural resources makes it more, rather than less, likely that legal issues will be tested in the oil and gas sector. The accelerated pace of change in the oil and gas industry make this one of the world’s most challenging and complex sectors in which to understand, draft and negotiate contracts. The legal and regulatory framework of upstream oil and gas industry contracts is constantly changing, therefore it is critical that all lawyers, commercial and contracts managers working in this sector are up-to-speed.

Conditions and requirements for granting authorizations
1) The authorizations may be granted on such conditions and requirements in order to ensure: a) the proper performance of the activities permitted by the authorization b) the financial contribution in money or a contribution in hydrocarbons c) national security

d) public safety
e) public health
f) security of transport
g) protection of the environment pursuant to section 11 and the terms specified in the Regulations made under this Law h) protection of biological and mineral resources and of national treasures possessing artistic, historic or...
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