A Critical Overview on the CRINE/LOGIC Contracts within the UK Oil and Gas Industry

Oil and gas represent two of most valuable resources in the contemporary world, being of paramount importance both for the sustainability of the worldwide economic growth as well as the wellness of the economic international relations. The growing power demand as forecasted in the next decades keeps on stimulating the oil & gas research and production activities, thus making such resources extremely strategic in the current and future world political scenario.\r
\r
The modern oil & gas exploration is an activity connoted by a high risk degree. In it, the scientific research is coupled at the highest levels with the technological progress, which makes such activity extremely capital intensive.\r
\r
For this reason, the research and production activities of oil & gas products, as well as those related with transportation and refinement, have historically been carried forward by international oil & gas companies (IOCs), to which national oil companies (NOCs) have been adding over the years.\r
\r
The current standardization in the model contracts represent the outcome of the evolution of the relationship between the IOCs and NOCs. In fact, at a certain point in time need arose to elaborate increasingly sophisticated mechanisms aimed, on one side, at ensuring a higher protection and stabilization degree to international investors in their contractual relations with the State and the States parties and, on the other side, at enabling the latter to more effectively control and manage the existing natural resources as well as obtain higher profits from activities conducted on their territories.\r
\r
The contracts CRINE/LOGIC, as model agreements promoted in oil & gas transactions in the United Kingdom continental shelf , are the outcome of the above premises, that is the intention by a certain state (in such case, UK) to foster the oil & gas activities on its territory by increasing the spectrum of international oil and gas companies eager to commit a substantial part of their worldwide budgets and at the same time not giving up on the long run its national interests.\r
\r
In the oil & gas industry, the contracts standardization may be considered an almost natural, arguments-free process. In fact, as much as the 80% of the clauses contained in the various forms of contractual agreements as used over the years is common to all these agreements, which has therefore been an ideal breeding ground for the development of standardized documents.\r
\r
However, like in any other process whose aim is the harmonization of several and different issues, also the standardization of contracts in the oil & gas sector has its advantages and disadvantages.