160 book reviews

Peter Roberts, A Practical Guide to Upstream Petroleum Granting Instruments. Doha,

Qatar: Qatar University Press, 2020. 146 pages. isbn: 978-992-713-917-8 (pbk.);
e-isbn: 978-992-713-928-4.

Despite today’s global transition initiatives towards sustainable alternative

energies, petroleum extracted from earth reservoirs, remains one of the most
important economic discoveries of our time. It is the first and fundamental
source of energy, the focus of most industrial and agricultural production in
the contemporary world, and the engine of scientific and social development
in contemporary international societies. Moreover, it is the starting point and
cornerstone of the gradual energy transition on which long-term strategic
plans are based.
Since the production of the first barrel of petroleum, much ink has been
spilled on the formulation of contractual frameworks regulating the oil and gas
sector. While all of these frameworks have a common overarching objective,
their granting instruments, as well as the impact of their results, vary. How
are upstream petroleum granting instruments, particularly production shar-
ing contracts, dealt with, balancing the interests of all parties? Peter Roberts,
lawyer and author of several works specializing in joint operating agreements,
invites us to explore this question from the perspective of the upstream petro-
leum-granting state. His book, entitled A Practical Guide to Upstream Petroleum
Granting Instruments, attempts to answer this question by highlighting the
most important joints of upstream petroleum granting instruments as well as
through an in-depth study of the typical production sharing contract.
The book, first, gives an overview of methods of granting petroleum rights
upstream, with focus on production sharing contract, which is by far the most
widely used instrument for petroleum exploration and production. However,
the author seeks to provide a practical analysis of the importance of a bal-
anced, and reciprocal documentary relationship between grantor and contrac-
tor to upstream petroleum operations. This ensures short-term flexibility on
one hand, and long-term stability on the other.
The book begins in part “A” by questioning the reasons for host state grant
of upstream petroleum rights to foreign investing company. He then exam-
ines the competing interests of the parties at three levels. He does this by
showing the evolution of these forms of contractual relations to the current
hybrid model. The author completes part “B” by classifying production sharing
contract parties vertically and horizontally highlighting the phased processes
and their respective obligations. The reader is also introduced to the financial
mechanisms in the contractual relationships. It completes by highlighting the
state’s status within petroleum operations and involving local contents in it.

©  koninklijke brill nv, leiden, 2022 | doi:10.1163/2211906X-11010007

book reviews 161

Roberts elaborates on the need for stabilization clauses, responsibility alloca-

tion when a contract provision is breached, as well as the emerging dispute
resolution mechanisms.
Upstream petroleum granting instruments have to manage competing inter-
ests by reconciling between the expectations of the state on one hand, and the
company’s potential investment expectations on the other. To avoid any doubt,
the author stresses that the nomenclature of the granting instrument is not
critical; it is about regulating the relationship of the parties, where the shape of
a relationship can be a hybrid that incorporates different provisions of several
forms of granting instruments (p. 12). “Change, is the only constant,” over time
the relationship of the parties develops due to a combination of risk factors,
dissatisfaction in economic balance and the increase in state’s technical and
financial capacities, which will prompt the latter to seek to change the founda-
tion of a granting instrument in the future (p. 23), as has happened with Brazil,
Indonesia, Russia and others.
The implementation of the contract between the parties requires that the
contractor be granted rights to carry out its permitted activities, in accord-
ance with prudent and good use of petrol fields (p. 45). For a certain period, it
may end up applying a complained termination event (un-remedied material
breach or insolvency event) only against the defaulting party without other
contracting parties. This is within an appropriate area that allows it to carry
out the required petroleum processes; so that this area may be extended, or
integrated according to special geological conditions for the reservoir located
on the seabed. At the same time, the relinquishment mechanism is applied to
balance the grantor’s use of abandoned areas with the contractor’s need for
sufficient time and area to carry out the required petroleum operations (p. 53).
Exploration phase is divided into fixed exploration periods and is sufficient
to allow the contractor to perform exploration obligations correctly. While
those obligations are considered inflexible (relatively), the contractor seeks to
achieve greatest amount of flexibility in how and when it performs these obli-
gations above minimum costs threshold.
Upon declaration of commerciality, the development phase begins for a
certain period and ends (often) with the start of production period. For fis-
cal terms, the author highlights the features of the cost recovery mechanism;
which is the basis for attracting the contractor to take the risk of exploration
phase, and that the cost petroleum ceiling should not exceed a certain per-
centage of costs. In contrast, “Profit Shares” represent the division of petrol
produced between the grantor and the contractor by fixed/progressive or flex-
ible (R-factor) sliding scale. The book gives very helpful illustrations on the
working of the fiscal terms of the contract (p. 82, 83).

Global Journal of Comparative Law 11 (2022) 155–166

162 book reviews

The author explains the importance of state participation in decision-

making on the conduct of various petroleum operations (p. 127). It should be
noted that the author has demonstrated the need for stabilization provisions
due to the state’s unreliable regulations and/or expropriations that may be
made through several forms which may lead to disputes between parties and
can be resolved through various dispute resolution mechanisms.
The author highlights the impact of reduced concession methods (p. 20, 60,
76), but it would have been helpful to see a broader analysis of the impact of
the various methods alluded to. This is due to the strategic importance in iden-
tifying the best contract partner for the grantor. Such a discussion would con-
tribute to the determination of the technical and financial capabilities of the
contractor as well as the nature of the legal relationship between the parties.
The study of states’ adoption of production sharing contracts for upstream
petroleum development is very important. However, as the author empha-
sizes, granting instruments can change over time. What economic advantages
do other instruments offer? Such comparisons would have provided a more
complete picture to industry practitioners and researchers.
All the same, Roberts’s A Practical Guide to Upstream Petroleum Granting
Instruments is undoubtedly an important beacon for a deeper exploration of
an area that is still evolving. Despite the extensive discussion in the literature
of the instruments for granting petroleum rights, this is the first systematic and
comprehensive guide to the analysis of the documentary relationship between
the state grantor and the contractor. It has drawn our attention to the most
widely used provisions of the production sharing instrument and their respec-
tive implications. The structure of the book and the topics it deals with, make
it a necessary platform for international experts in petroleum and gas laws, in
addition to governmental authorities involved in the grant of upstream petro-
leum instruments. The author’s contribution is therefore important to a wide
range of readers. It should be noted, that the book contains illustrations that
make it easier for the reader to understand the mechanism for regulating the
relationship between contractual parties.

Mostapha al-Masry
PhD Candidate in Petroleum Contracting, Masters in Business Law,
Lebanese University, Beirut, Lebanon
mostafamasry12@outlook.com

Global Journal of Comparative Law 11 (2022) 155–166