Aipn Gas Balancing Agreement

James English is a partner in the Houston office of Lewis Brisbois, TX, one of the ten largest law firms in the world with more than 50 offices in the United States. Prior to that, Mr. English worked for Anadarko Petroleum Corporation and worked on natural gas projects on six continents. In Africa, Mr. English concluded with both Mozambique LNG and gas sales/marketing. In Asia, Mr. English currently supports a commercial company that sells LNG on a spot basis to several receiving terminals in China. In North America, he has worked on gas projects in the Perm, DJ Basin, Barnett and Trinidad. Mr. English has also worked natural gas projects in Australia and New Zealand. He is currently co-chair of the design committee of the AIPN LNG SPA and is active in the areas of upstream gas agreements, midstream agreements, natural gas marketing and LNG commercialization.

A farm out contract acts as a kind of property purchase contract whereby a seller (the “farmer”) agrees to transfer part (but not all) of his share of an upstream asset to the buyer (the “Farmee”), in exchange for the buyer agreeing to take (or finance) work obligations such as the acquisition of seismic data or drilling equipment. With respect to the oil and gas industry, the upstream “asset” that is transferred is generally an interest in a licence, a production-sharing contract or another concession granted by a government to a company to explore and produce oil and gas. In the case of transactions in which the farmer agrees to transfer ownership of the asset in question to the farm, the parties can also verify whether all necessary consents have been obtained by third parties, but before all work obligations are fulfilled (or paid), whether the return and/or recovery for default is sufficient. Both drugs can lead to complications. Responsibility and quantification of damages related to non-compliance or financing of labour obligations under farm out agreements can give rise to complex disputes such as those that occurred between Dana Petroleum and Woodside with respect to exploration drilling off Kenya, but which were ultimately settled outside the court.

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