When a joint venture partner pays part of the undivided shares of an area to a newcomer or an existing partner, it uses a farm-out agreement. The party that would water his rights is often called “Farmor” and the beneficiary is called “farmer” or “Farminee”. The transfer is usually made against compensation, usually paid through obligations to finance certain works, such as drilling wells, but sometimes in cash. The Farm-out can be signed at any stage, from exploration to production, but host countries can restrict or ban farm-outs for a period of time shortly after allocation. While industry practices vary considerably with respect to the terms of different farm-out agreements, standard farm-out agreements based on industry practices are available through the aipn. Due to the high risk in the upstream oil sector, companies often present risks and costs related to cooperation within a joint venture. This is usually done by all parties signing a joint venture agreement, often with the participation of the host State or its National Oil Company. This can allow a country to access the technical know-how of international oil companies and participate in decision-making. Host State regulations may also require oil companies and international consortia to jointly conduct oil activities. This one-day course aims to give participants the knowledge to create well-structured and balanced joint ventures, which lead to business success and other partnership opportunities. It is very common for an oil and gas project to be structured as a joint venture (JV), especially with regard to upstream projects.
This is due to a large number of reasons, such as: although there are good reasons to set up a joint venture in the oil and gas industry, the available data shows that the average JV takes 18 months to establish it and the vast majority of them survive less than 5 years, with some studies suggesting that the failure rate of joint venture relationships can be as high as 70%. This is because these benefits are not easy to implement in practice, as most joint ventures are cross-border, multi-stakeholder and multicultural. If the location of an oil reservoir coincides with an international border, each state can order unification, because the principle of permanent sovereignty over natural resources means that states have exploitation rights over their own territory. . . .