Production

Success in the form of a commercial discovery is obviously the aim of all exploration but many issues need to be considered in advance. Production and the disposal of hydrocarbons give rise to a number of commercial as well as contractual issues. These range from installing the necessary production equipment and subsequent operation of the production facilities, transporting the hydrocarbons and ultimately their sale.

The contracts and agreements necessary to deal with these matters are often negotiated and concluded at an early stage and therefore it is important to ensure there is sufficient flexibility in the arrangements to cover delays and changes to the prevailing economic climate at the time of production.

It is important to ensure there is sufficient flexibility in the arrangements to cover delays and changes to the prevailing economic climate at the time of production.

Where transportation requires either new pipelines to be built or connection to existing facilities, then there is usually a long lead time due to ordering of requisite materials, but also to take into account governmental permitting procedures. For these reasons, it is critical to ensure that contractors are aware of timescales and can be held to account for delays which may adversely affect ancillary arrangements with subsequent knock-on effects down the line.