Cross-border Energy Trade

Teaching hours and credit allocation: 30 hours, 6 credits
Course assessment: exams

Aims

The overall aim of the course is to provide students with a basic understanding of the most important types of contracts in the international oil and gas industry. The course discusses the main principles relating to energy investments and trade in reference to established energy agreements. The focus is particularly on energy agreements such as Production Sharing Agreements (PSAs), signed between a government of a country with oil and gas reserves and international oil companies and Joint Operating Agreements (JOAs). In a PSA the country’s government awards the execution of exploration and production activities to a foreign oil company while the latter provides the technical and financial services required for the execution of the undertaken activity. The oil company bears the financial risk of the initiative but acquires an entitlement to a stipulated share of the oil produced as a reward for the risk taken and for the services rendered. The state remains the owner of the petroleum produced subject only to the contractor’s entitlement to its share of production. Another theme that will be closely examined is JOAs. The oil and gas industry is facing increasing challenges with regard to project execution, inertia in procurement and overall supply, thus culminating in the use of a larger number of independent oil and gas servicing companies. The parties enter a JOA in order to conduct joint-operations and consequently establish a common contractual framework. The course also discusses energy investments protection. The focus will be on the main principles of WTO/GATT and the Energy Charter Treaty (ECT) but will also address the issue of investment protection provided by several bilateral investment treaties (BITs). The purpose of these treaties is to create a stable international legal framework to facilitate and protect foreign investments by guaranteeing substantive standards of treatment that are to be accorded to an investor by a host state, such as fair and equitable treatment, full protection and security, national treatment, most favoured nation treatment and protection against expropriation.

Learning outcomes

On completing the course the participants will be able to:

  • distinguish between the Energy Industry Segments (Upstream, Midstream, Downstream);
  • approach the study of transactions in the energy markets from an economic perspective
  • familiarize themselves with the most frequent and significant energy agreements such as Mineral Deed, Assignment, Conveyance, Oil, Gas and Mineral Lease, Participation Agreement, Operating Agreement, Farmout Agreement, Purchase and Sale Agreement, Gas Sales Agreement etc;
  • recognize a series of fundamental questions related to the legal treatment of contracts such as governing law, rights and obligations of the parties arising out of each agreement etc.;
  • acquire in depth knowledge in Production Sharing Agreements, Joint Operating Agreements.
  • approach the study of relevant legislation, cases and international agreements in an analytical and systematic way;
  • demonstrate a thorough and comprehensive grasp of the principles and applications of international law protection;
  • familiarize themselves with the most important Treaties regarding international energy investment protection and the case law thereof.

Content

  • Overview: the energy industry, energy security and energy markets;
  • Principles of Energy Contracts;
  • Energy Agreements;
  • Upstream: Production Sharing Agreements, Joint Operating Agreements, Farm-ins and farm-outs;
  • Midstream: Gas Sales Agreement;
  • Downstream; Regulated Gas Agreements, Terminal Use Agreements, LNG Agreements;
  • Investment Protection under the International Law – Energy Charter Treaty;
  • Investment Protection under contracts – Stabilisation clauses;
  • Case Law on the ECT’s investment protection issues.