Recent Evolution of Petroleum Exploration and Exploitation Agreements in Developing Countries: New Approaches to Introduce More Flexibility and Progressivity in the Contractual Terms

Over the last decade rather important changes have occurred in the legal and economic aspects of international petroleum agreements for exploration and exploitation. In the late nineteen seventies, as a consequence of the strong increase in oil prices, there was a general tightening of contractual terms and conditions. With the present oil market imbalance, characterized by sharp price falls, there is a tendency to ease the applicable contractual terms. In such a rapidly changing environment, the economic terms contained in a petroleum agreement should be properly designed to introduce a certain element of flexibility and progressivity in regard to the government take, without unduly complicating the fiscal package or discouraging potential investors. This is the present challenge for international petroleum negotiators.