OIL AND GAS CONTRACTS

PLEASE ANSWER THESE QUISTIONS:

You are a second year associate in the Peruna Law Firm, based in Dallas, Texas. The Peruna Firm is a global energy firm with offices worldwide. Recently the Peruna Firm assisted the United Republic of Tanzania to organize its 4th Offshore Licensing Round. The Mexico City office of the Peruna Firm has been approached by Senator De La Garza, who is looking to form a multi-party consensus on a New Energy Reform program for Mexico. Senator De La Garza has heard that the international energy industry is very excited about the Tanzania Offshore Licensing Round, including the draft Tanzania Model Production Sharing Agreement, and believes that there may be lessons that Mexico could learn from Tanzania?s experience. The Senator has asked the Peruna Firm to provide recommendations for him to consider.
The managing partner has asked you to review the Tanzania Offshore Licensing Round materials, including the Petroleum (Exploration and Production) Act (file #1) and the Model Production Sharing Agreement (file #2), in light of the constitutional and legal constraints on the petroleum industry in Mexico as set out in a powerpoint presentation from Peruna?s Mexico City office (file #3) and provide a report that he can use to advise Senator De La Garza on the following:

1. Identify and discuss five (5) major concerns with the Tanzania Model Production Sharing Agreement (File # 2) that you feel an IOC investor might have, including any omissions. In other words, you may suggest deletions, amendments, and additions to the contract. As a general rule, you should consider that one concern equates to one Article of the Contract, including a new Article, if any, that you may determine should be added to the contract. You should prioritize your concerns, beginning with your most major concern, next most major concern, etc. until you have discussed five major concerns. Be sure to identify and number each of your five major concerns, explain why you believe they would be IOC concerns, and suggest possible resolution(s). In addressing your concerns, you should consider that Senator De La Garza will be successful in obtaining changes to Mexico?s Constitution and laws to permit a Tanzania style contract. Do not discuss Mexican Constitutional issues; focus on the contract.

2. If Mexico adopts a Tanzania style contract, would IOCs be required to provide Pemex with a copy of their Joint Operating Agreement? What is the basis for your answer? Would providing a copy of the JOA be a concern for an IOC? Why? Should Mexico nonetheless insist on being given a copy?