The three types of well assistance agreements are the dry hole contribution, the hole contribution and the surface contribution. One of the most common SPAs occurs in real estate transactions. As part of the negotiation process, both parties agree on a final sale price. Since the various mineral development agreements discussed above are designed by the host country, they usually contain provisions aimed at protecting the interests of the host country or promoting the policy of the host country. The scope and nature of these provisions will vary from country to country and from common type of mineral exploitation agreements. Nevertheless, many mineral development contracts will contain at least some of the following contractual requirements. Formation. Many contracts require the developing company to train local workers or employees of the national oil company. The training obligation can be described with some particularity, but it is customary for the obligation to take the form of a fixed annual obligation for training costs. Local labour and servicesMarket development contracts often require the mineral developer to use local labour, unless special skills are required and services are entered into with local contractors. In some countries, there are companies that belong to or are linked to the host country or the national oil company that provide oil services.
The mineral developer may be required to enter into a contract with that particular company, as opposed to a more general obligation to use local contractors. If the company employs expatriate staff, oil development agreements can limit the number of expatriates, their roles and obligations, and even the types of goods they can bring into the country. Obligation to market domestic. Some contracts require the oil producer to sell a certain percentage of its production on the domestic market. Under a production-sharing contract, this national marketing obligation (DMO) could apply to the remaining share of the developing enterprise after making its share of production available to the host country, which represents an even heavier financial burden for production in the mineral concession region. A DMO can have significant negative effects on the economic viability of a mineral concession area, in particular when the natural gas or oil market is low in the host country or when payment for oil delivered to the national territory is not converted. In addition, a DMO may require the company to sell oil or gas on the domestic market with a discount on international open market prices. Data. Some mineral development agreements require development companies to provide the host country with copies of data such as seismic surveys and drilling results. Other agreements transfer ownership of the data to the host country and grant the oil company a license to use the data as long as the company maintains its concession, license or contract in good condition. The local branch and the local agent.
A contract or license may require the developing company to have a local office and hire residents as employees of that office. Some mineral development agreements require that the developing company be represented by a local agent. The choice of law. Many international oil agreements between extractive industries and host countries require that the treaty be subject to the laws of the host country. As stated in paragraph 17.8, the application of an arbitration clause may help to address some of the negative effects of the application of local law. Attribution and transfer restrictions. Mineral development agreements usually require some sort of authorization from the host country before a mineral stake can be transferred in whole or in part to a third party. . . .