Agreement Unit Definition

The question then arises as to how the parties to different licences can extract hydrocarbons from those fields that have a common purpose in order to maximise their potential and the unnecessary depletion of the field, as well as the revenues from these operations, which will be carried out under two (or more) different licences; to divide. how to manage these operations and how to determine the interests of the respective licensees. To tackle this problem, the oil and gas industry has developed the concept of “unitisation and unit operating agreement”. Care should be taken to ensure that an appropriate choice is chosen. This is especially true when unity exceeds two limits of jurisdiction and the laws of substance and procedure are different within the boundaries of a given entity. Here, too, it is preferable for the parties to a multi-jurisdiction agreement to decide for themselves the appropriate legal choice rather than a court, expert or arbitrator choosing the applicable law based on the classification of the case. The Secretary of State for the Oil and Gas Industry has the authority to require standardization when he is satisfied that a field is in a licensed area and in a territory consisting of another license, and believes that this is in the national interest in order to ensure maximum final oil production and avoid unnecessary competitive drilling. that the field must be standardized. In all countries, the percentages of participation and participation in licenses must be approved according to somewhat standardized legal procedures. The distribution of production according to a participating formula, the appointment of an installation operator and an operator`s committee, the provision of the turnover of equipment to the unit with corresponding financial accounts and the provision of shareholders` contributions to the operating costs of the unit are the most important issues covered by the contracts awarded. Depending on the infinite range of agreements that can be concluded, voluntary unification agreements can become extremely complex and bring together the most difficult problems in the construction sector.

This is especially true when more than one pool is involved in the unit, an unusual, but not unusual, situation. The normally operational sections of the unification agreement constitute unity, set out their impact on shareholdings and avoid certain legal pitfalls for the unwary.

Comments are closed.