Oil Agreement Concession

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Risk service agreements are the least used type of contract among the three listed here. They have been used by states that have a nationalist approach, or by countries like Venezuela, Iran or Iraq, which have long had oil production. Under this type of agreement, the host Member State is merely terminating the service of an oil company or consortium in order to benefit from its financial and technical know-how. The company or consortium assumes risk and responsibility and is reimbursed by a service fee that is usually paid in cash. An example of this type of agreement is the absence of Iran`s buy-out agreements, which have proved too painful to be considered by a private investor. The oil and gas industry operates in countries around the world in accordance with a number of types of agreements. These agreements can generally be categorized into one of four categories (or a combination of categories): risk agreements, concessions, production sharing agreements (PSA, also known as production sharing contracts, PSCs) and service contracts. Therefore, under this type of agreement, the company or consortium provides technical know-how and capital and assumes the risk of the project in return for exclusive rights to oil and/or gas exploration and production originating in the contract territory. The host state generally owns the facilities and facilities. Unless otherwise stipulated in the legislation or the production-sharing agreement, the company also pays the income tax to the host Member State as well as all other taxes and contributions provided by the legislation and the corresponding contract. The renunciation of the concept of concessions had become a matter of principle. As a result, production-sharing contracts and risky service contracts, in their many forms, have prospered.

However, the title of “concession” has not disappeared. It survived and adapted to the new circumstances and normally included state ownership in oil and a compulsory share of the national society under association agreements. The concession system has continued to be used by countries with no known oil potential, with small, little-studied territories and pragmatic governments. Countries with interesting geological potential or already producers tended to share or associate production. Nationalist countries, with experienced public oil companies and great geological potential, have tended to contract risky services. Companies quickly adapted to the new system, as it did not rule out the possibility of limiting risks and making significant profits. In collaboration with the World Bank, they encouraged the rate of performance-based profit-sharing contracts. At least concessions are made only under conditions that require states to submit to peer review, i.e. collective self-control of states. Peer review is also the main mechanism for monitoring the implementation of commitments under international environmental regimes, which is also largely national.

Peer review can take the form of a regular accountability for national actions and progress. The actual on-the-spot checks carried out by international agencies or their staff remain exceptional. During grounding, inspections such as that of the International Atomic Energy Agency can only be carried out with the agreement of the state visited (a tribute to the principle of sovereignty that still prevails). The chosen site is a major representative of the CEMIG concession area, which is home to private, commercial and industrial customers in urban and rural areas, and covers 8,000 consumers in a 23,000 km region consisting of two substations and eight rowers.

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