العناصر الأساسية في تحديد أنواع العقود
key elements of contract types:
1-
Which party owns the hydrocarbons?
2-
How will the IOC be compensated?
3-
How much operational freedom does the IOC have?
4-
Which party owns the production related assets?
5-
What is the nature of the state’s take?
· Hydrocarbons
ownership
-
Almost all countries title to subsurface
hydrocarbons
-
In some countries, the IOC can’t legally own
hydrocarbons at any stage of production or exploration, they only receive cash
payments
· IOC compensation
-
The IOC might:
A. Own oil
production and simply pay royalty or taxes
B.
Have no title to oil and merely receives fees
C.
Split production with the state
-
The method of compensation will determine whether the
IOC’s revenues are driven by:
o The market price
of oil
o The cost of the
IOC’s investment in the exploration and production activities
o Or a combination
of the two
· Operational
freedom of the IOC
-
The IOC provides investment capital, so it desires sufficient
control over:
o How it is spent
o Subsequent operations
-
However, in many nations it is politically
unacceptable to enable IOCs to have control over oil
-
Control can be illusory i.e. countries
that lack managerial and technical experience are unable to control
· Ownership of
assets
-
IOC may finance the capital but not own the assets
· The nature of
the state’s take
-
The states take can be:
o Volume-driven
e.g. royalty
o Profit-driven
e.g. tax
أنواع
العقود البترولية
Main contract types
1-
Concession عقد
الامتياز
2-
Production-sharing عقد مشاركة الإنتاج
3-
Service عقد المقاولة
·
Concession contracts
-
It was the most common type of oil contracts
-
It grants the IOC with substantial rights and
privileges:
o The IOC enjoys
wide-ranging (not total) managerial control over operations i.e. little
government interference
o The IOC has the exclusive
right to explore for and produce oil in the concession area
o Owns all
production-related assets
-
The role of the state:
o Royalty and
tax collector
o Sometimes
requires work programs, particularly in the exploration stage, as a condition
for granting a license
-
IOC payments include:
1-
Royalty
2-
Tax
3-
Rentals
4-
Bonuses
5-
Profits tax
-
Disadvantages of concession contracts:
o The IOC may
compromise the environment, health, safety, or human rights
o The IOC may
impose political or economic pressure on the state
·
Production-sharing contracts (PSC)
-
The state maintains title to the hydrocarbons
-
The IOC operates at its sole risk and expense
but under the state’s control
-
Financing may be solely by the IOC or jointly with the state
-
The state owns the assets
-
Production generally belongs to the state, with the exception of the IOC’s
production share, title to which passes to the IOC at the point of export
-
How will the IOC be compensated?
o If no
production is achieved, the IOC will receive no compensation (RISK)
o Otherwise, the
IOC is entitled to recover costs, and after cost recovery, the balance
of the production is shared on a pre-determined percentage split (the
naming of this type of contracts comes from here)
-
The IOC’s income is often taxable, with the tax
often paid from the state’s share
· Comparison
between the concession contract and the production-sharing
contract
|
comparison
|
Concession
|
Production-sharing
|
|
Ownership of hydrocarbons
|
The IOC is a quasi-property right holder
|
The state maintains title to the hydrocarbons
|
|
The right of management
|
The IOC has broad rights
|
Belongs to the NCO
|
|
Title to production
|
Transfers at the wellhead
|
Transfers at the point of export
|
|
Taxes stabilization
|
|
Generally includes a mechanism to stabilize taxes
payable by the IOC
|
|
Title to assets
|
Passes to the state upon expiration of the
concession
|
Passes to the state at the point of landing in the
national territory
|
·
Service contracts
-
It concedes maximum national control (the IOC
has no right to the service or title to oil production)
-
The IOC:
o Funds all capital expenditures and
operating costs
o Responsible for
executing operations
o pays corporation
tax
-
Compensation: the IOC is entitled to:
o Recover capital
and operating expenditures
o Receive
compensations in cash based on the volume of production
-
Economic benefit for the state: service fee is not tied to oil
prices, higher economic benefits under the service contracts than other types
of contracts in high oil price markets
·
Comparison between service contracts and PSCs
|
comparison
|
Service
contracts
|
PSC
|
|
IOC rights in the area being explored
|
fewer
|
Higher
|
|
States control
|
Direct
control
|
Less
control
|
|
Payment of IOC
|
Cash or
buyback arrangements
|
Crude
oil and cash
|
·
Comparison between the three types of contracts
Very important: refer to the table
p136-137
العوامل المالية والاقتصادية الأساسية في تحديد ربحية المتعاقد
Key financial and economic factors
· Factors that
influence contract profitability from the IOC’s perspective
1-
The Tax regime
a.
Taxes of general applicability
b.
Taxes specific to the petroleum sector
c.
Taxes specific to the contract
2-
The Mechanism whereby the IOC will recover its
investments
3-
When will the government ‘take’ its share of
the profits?
4-
Will the contract employ ‘ring fencing’?
5-
How will the oil price be determined?
6-
what level of participation will the government
have in the vehicle undertaking exploration and production activity?
المواد الدستورية المتعلقة بإنشاء المرافق النفطية
Articles of the constitution relating
to creation of state entities
-
article 73: the amir shall, by decree, issue
regulations necessary for the organization of public services and
administrations, not conflicting with any law. يضع الأمير بمراسيم لوائح الضبط واللوائح
اللازمة لترتيب المصالح العامة بما لا يتعارض مع القوانين
-
Article 133: law shall regulate general and municipal
self-governing bodies in such a way as to ensure their independence under the
direction and supervision of the government ينظم القانون المؤسسات العامة وهيئات الإدارة
البلدية بما يكفل لها الاستقلال في ظل توجيه الدولة ورقابتها
مقارنة بين المجلس الأعلى للبترول ومؤسسة
البترول الوطنية
·
Comparison between SCP &
KPC
|
Comparison
|
SCP
|
KPS
|
|
Constitutional basis
|
Article 73
|
Article 133
|
|
Legal personality
|
Does not have an independent
personality
|
Has an independent legal
personality
|
|
Legal instrument of creation
|
Amiri decree
|
Law
|
|
Budget
|
Does not have an independent
budget
|
Has an independent budget
|
|
The role of the government
|
Presidential power
|
Administrative custodianship
(the entity remains under the direction and supervision of the government and
must be linked to a particular minister)
|
|
The government can assume
the entity
|
Yes
|
No
|
ما هي الوصاية الإدارية؟
·
Administrative custodianship:
-
Powers to stop or cancel a decision (but can't amend
it)
-
It can appoint directors in the entity
-
It can send issues back to the entity for
reconsideration
· Who practices
custodianship over KPC?
-
Both the COM and the SCP
· Q. The powers of
COM and SPC in respect of KPC are they limited by article 133 of the
constitution?
· A. no. they both
retained the power of administrative custodianship over it.
The K companies
K companies
-
Creating based on the commercial law
-
They are not 'public corporation' like KPC
(article 133 is not applicable)
-
NP. Public Corporations are administrative entities
not companies in which the state owns shares
-
Their funds are considered 'public funds' and
protected by law NO. 1/1993
Nationalization التأميم
ملخص ما يلي: في السبعينات بدأ تأميم الشركات النفطية
مما استدعى استبدال كلمة "ملاك الأسهم" بكلمة أخرى تدل على الشخصية
المعنوية العامة التي تمثل الدولة و تتملك الشركات بعد نقل ملكيتها للدولة ، وفعلا
تم استبدال "ملاك الأسهم" في الوثائق التأسيسية لتلك الشركات بـ
"المجلس الأعلى للبترول" فأصبح المجلس مالكا لجميع أسهم الشركات و
مهيمنا على الجمعية العمومية العادية و الغير عادية لهذه الشركات ، واستمر هذا
الوضع حتى أسست مؤسسة البترول الوطنية حيث نقلت ملكية الشركات إليها وأصبحت مهيمنة
على الجمعيات العمومية العادية .
·
Q. who does assume the function of the general
assembly of KPC's subsidiaries?
-
In the 1970s, many companies in the oil sector
were nationalized (K companies were among them)
-
After nationalization, the reference to 'shareholders'
in the various constitutive documents of the companies needed to be replaced by
reference to 'state entities'
-
E.g. K companies
(shareholders replaced by the SPC)
-
When K companies were first
nationalized, the SPC took over the function of both:
o The ordinary general assembly
o The extraordinary general assembly
-
Later, upon the establishment
of KPC, ownership of the K companies shares and the function of ordinary
general assembly passed to KPC
الأسس الدستورية للتأميم
Constitutional bases of
nationalization
-
Article 21 [Natural Resources]: Natural
resources and all revenues therefrom are the property of the State. It
shall ensure their preservation and proper exploitation, due
regard being given to the requirements of State security and the national
economy.
-
Article 17 [Public Property]: Public
property is inviolable and its protection is the duty of every citizen للأموال العامة حرمة وحمايتها واجب على كل
مواطن
Creation of new state-owned companies
in the oil sector
خلاصة: بعد تأميم الشركات النفطية قامت الكويت
بإنشاء شركات نفطية أخرى بناء على القانون التجاري وليس على المادة 73 ولا 133 من
الدستور ، و ذلك لأن أساليب القانون التجاري أكثر مرونة وأقل تقييدا ، فعلى سبيل
المثال يخضع موظفوا الشركات – بما فيها شركات الـ K إلى قانون العمل في القطاع الأهلي (القانون الخاص)
بينما يعتبر موظفوا مؤسسة البترول الوطنية موظفين عامين ويخضعون لقانون الخدمة
المدنية في الأمور التي لم ينص عليها القانون الخاص بهم .
-
More convenient than creating entities based on
article 73 or 133 because:
o Based on commercial
law (less restrictions than administrative law) e.g.
§ Companies
employees subject to labor law
§
KPC employees are public servants subject to
the civil service law where KPC's personnel regulations are silent.
KPC
-
Created under article 133 of the
constitution
-
COM/SCP are administrative custodians
-
Independent entity: which means that it enjoys operational
separation from the rest of the government
-
Independent budget
-
Its revenues are retained by it rather
than going to the ministry of finance
-
It subject to its own establishing law,
civil service law only applied if that law is silent
-
It does not subject to the commercial law,
even though it can choose to conduct so.
K companies
-
Under commercial law
-
The board of KPC is its ordinary
general assembly
-
The SPC the its extraordinary
general assembly
-
K companies have a public aspect, they are
considered 'semi-public services' or 'quasi-public services' because
they are owned by the state
-
Article 152 of the constitution allows some public services to be run by
the private sector, K companies are examples
-
The government is constitutionally obliged to protect
and oversee the K companies
-
K companies subject to the direction and policy of
the government
-
Employees are considered public servants
-
Funds are considered 'public funds' protected
by 1/1993
تعريف النفط الخام
Definition of Crude oil
-
A hydrocarbon
-
Naturally-occurring substance
-
Dark, sticky liquid
-
Source of energy
-
Highly flammable
Definition of Petroleum in the
Kuwaiti law
-
Article1 of the law no. 19 for the year 1973 the term
petroleum means 'all natural hydrocarbons whether in solid, liquid,
or gaseous state which are or can be produced from the surface of
the ground or from underground and all hydrocarbons or other kinds of
fuels derived therefrom.
كيفية قياس النفط الخام
How is crude oil measured?
-
Measures in barrels
-
1 barrel = 159 L
-
May be measures in tons
استعمالات النفط الخام
The uses of crude oil
-
Should be refined intro petroleum products e.g.
gasoline
1- fuel
2- lubricants
3- asphalt
4- perfumes
5- insecticides
Crucial dates تواريخ مهمة
|
The first geological
survey (the start of the story)
|
1913
|
|
Signing of the oil
concession agreement
|
1934
|
|
Oil was discovered (Burgan
well)
|
1938
|
|
The first oil shipment
|
1946
|
|
Nationalization of the oil
industry
|
1975
|
