Legal Aspects In The Oil And Gas Industries In The World

Question: Describe about the legal aspects in the Oil and Gas Industries in the world economy during its international business transaction? Answer: Introduction: Over the last few years, the global oil and gas companies have laid huge emphasis on the legal aspects of the oil and gas industry during the time of business activity. In order to raise awareness of any environmental issues the government of the countries responded appropriately to the alert notices published by the Department of Energy and Climate Change (DECC). According to the view of Dubiel et al. (2012), the Petroleum Act 1998 taken by the UK Government established the dictatorial rule relating to the oil and gas exploration and production in the UK. The industry is regulated by four members of statutory bodies including the Environment Agency (EA) in England, Health and Safety Executive (HSE), the Scottish Environment Protection agency (SEPA) and Natural Resources Wales (NRW) in Wales. The UK and Dubai are considered as the primary instances for the fuel industry policies (Gautam, 2011). On the evening of 20 April 2010, a gas unconfined and consequent explosion rose on the Deepwater Horizon oil rig working on the Macondo exploration well for British Petroleum in the Gulf of Mexico (www.gov.uk, 2013). As a consequence, several people died and the corporate ethical issues occurred in the oil and gas industry. The leaked hydrocarbons polluted the environmental balance of the UK oil and gas industry. The environment and livelihood communities were also affected for this issue. To correct the situation, the UK government introduced set of rules and regulations for the fuel industries of UK to ensure that it does not happen again. The British Petroleum follows the rules of arbitration after the incidents in the Gulf of Mexico for its huge advantages. Like the UK, the other country that has the industry of oil and gas, have emerged a new law for the oil and gas companies. The statistics of the incident reflects that UK has developed its importer system in the crude oil and petroleum products, as because of the incidents in the Gulf of Mexico the global international companies prefer arbitration in commercial transactions. Arbitration allows a mutually agreed third party while business transaction takes place and it is a binding method of dispute resolution rather than the litigation. However, the litigation presents the case study with proper evidence and arguments in front of the jury. It is the major reason that the international companies of oil and gas industries require to choose the arbitration process as there is no binding decision by the court. Pros and cons of Litigations The process of litigations is very simple and formal for the both sides offering the opinions with proper evidence to support the argument. The whole process is transparent and open to all public. Thus the winner party gets the benefit of the court decision. In contrary, as it is open system, oil and gas disputants are usually reluctant to take the route of dispute resolution. The decision is enforceable to the same jurisdiction and it becomes more controversial. The entire process is costly for the both parties and a lengthy procedure to accomplish. Therefore the global companies do not prefer the process of litigation in case of oil and gas transport. Pros and cons of Arbitration This process is more flexible than litigation and it can be modified according to disputant requirements. The parties to a dispute can choose between institutional arbitration which gives more flexibility and visibility to the decision. The cost factor is usually less that litigation process and it also consume less time management. The disputants are liberated to choose the venue and platform for arbitration. On the other hand, the major disadvantages are that there is very limited scope of appeal after an award due to which parties might be reluctant to use this method of dispute resolution. The process can become as much luxurious and time consuming as litigation if one party decides to extend the proceedings. Hence, this can be deduced that the petroleum industries of worldwide used to uphold the norms of arbitration while executing the business transaction in a national and international basis. As per the Energy Policies relating to the oil and gas from the energy consumption is divided into three following aspects like Heat, Electricity and Transport. The international fuel industries and its territorial sea could follow the rules of the Petroleum Act. In the opinion of Petrov and Petrova (2015), this particular Act gave the host government to grant the licenses for exploring and exploiting oil and gas resources. The company who wants to participate in the fuel industry needs a license. There are three main kinds of licenses: Seaward Production License This is approved only for the offshore fields. It wraps the complete existence of grassland of exploration to production. Petroleum Exploration and Development License This law grants for the onshore fields and also covers the lifetime field (Olawuyi, 2015). Seaward Exploration License It only covers the outside exploration activities only. This kind of license is granted under a non-exclusive Exploration license. The official characteristics of the oil and gas industry are a vast topic to exhibit. This essay only considers few approaches to demonstrate. The essay is going to evaluate the key philosophy of the contact details on the global business transaction. The substantive regulations of the global law relevant to the fuel industry are also described in the research. Along with that, the essay demonstrates a critical understanding and effectiveness of the importance of oil, and gas law regarding the commercial context. The study also revealed the reason of choosing arbitration rather than litigation by the business entities to mitigate the oil and gas issues for resolving the disputes. Body: The global oil and gas industries construct a considerable input to the energy safety and the financial system of the country. It is necessary to understand the primary rules of international law which is valid for the oil and gas industry. The essay demonstrates the international Oil and Gas Law below: To recognize the characteristics of modern lubricate and gas law rule To identify the international legal rules applicable to international boundaries To execute the legal import and export of products, contracts and other arrangements that includes work programmes, production and distribution To negotiate with the host countries, regarding transportation and other identical metrics To evaluate and adopt the international engineering program and other procurement As per the global economy relating to the fuel industry, the unwanted rivalry, the energy organizations and price swings are comprised for converting the global business model approach. According to the opinion of Palazzo Almada and Parente (2015), the key trends of this sector have risen above the national border with restructuring and privatization in order to the emergence of the competitive market. The international oil and gas industry involves expensive operations for a very long time. Disputes may arise while international deal may occur relating to the quality and quantity of the goods. In order to reduce the progress issues of the oil and gas operation, the fuel industries use the theory of arbitration. Arbitration is a form of agreement between two parties to solve the disputes outside from the court. In case of arbitration, the two parties involved in the disputes have to consider ones decision for making a successful deal. The advantages of arbitration theory include the availability of pre-established rules and procedures to ensure the arbitration proceedings in a timely manner (Hitchin, 2014). The administrative advantage of arbitration assistance helps the involved parties to proceed with arbitration law for establishing the settlement with a proven record. However, the litigation is a slow process and expensive with legal fees for the court settlement. As the oil and gas industry is a regulated by the government norms, the parties involved in the oil and gas disputes avoids the rules of litigation for its slow tendency. The win-loss approach of the litigation theory is another reason to avoid the process of litigation by the parties (Lardinios and Klundert, 2014). Therefore the parties used to opt the process of arbitration in the international petroleum industry. The high degree use of contacts drafted by the professional advisers assists to resolve the dispute between the two parties. Overlapping the commercial interest and the long term contr actual relationship between the two countries of oil and gas companies could be possible to mitigate through litigation. As the litigation is expensive, time consuming and can destruct the good relationships, the countries with oil and gas industries are shifting towards choosing the arbitration for receiving a better outcome. The total responsibility for the arbitration administration is projected to the Secretary of state for the DECC. DECC uses a Petroleum Exploration and development License (PEDL) that gives a company or the group of the companies the exclusive rights to choose arbitration law for resolving the issues. According to the opinion of Gautam (2011), the set of protocols adopted by this committee is for ensuring safe working practice and onshore operations under the arbitration rules and regulations. The Minerals Planning Authority (MPA) controls the overall process of growth and utility of the land without hampering the communal interest. This authority provides the appropriate location for ensuring the proper development regarding the transaction activities. Additionally, Mcleod-kil (2009) observed that an Environmental Impact Assessment (EIA) is a measurement that determines the potential optimistic and pessimistic impacts of the projects carried out by the MPA under European Legislation. The commercial contracts regarding this sector must be understood in the broad sense that includes not only the trade transactions but also exchange of goods and products. As per the principles as rules of law governing the contract the parties who want to adopt the rules might applicable to the contract for combining the references to the principles with an agreement. However, Abuqdais (2007) argued that by applying the rules of law the parties could stop the agreement by showing the dispute s regarding the business transaction. The characteristics of the upstream oil and gas contracts hold the value of the underlined facts that includes: association of supply holders Valuable agreement Several kind of threats, huge investments and great remunaration Long duration Written agreements According to the opinion of Adedeji (2008), the commercial realities, of the oil and the gas industries, while attending the business transaction has followed the rules of contract law such as bargaining power and the competition law. The sources of lubricate and gas law include the international rules and regulation, national law that involves ownership of the natural resources. With the addition the types of regimes, including the common law based on the local judicial system and civil done by the legislature are also applicable to the business transaction (Kyepa, 2012). The Islamic law is another aspect that is applicable for the Arabic countries that has a mix traditional of the Islamic law and civil law. In case of oil and gas industries, the countrywide legislation implies to each phase of the oil and gas production. These key principles are has materialized the key principles of the commercial transactions and the new trends of the oil and gas sector. For waste controlling dispute the arbitration legislation is consisted with a different framework for the waste control in the oil and gas industry. According to the opinion of Marshall (2011), The United Nations Rio Declaration on Environment and Development 1992 was introduced as the Polluter-Pays principle. The EU Waste Framework Directive provides statutory access on the environmental requirements for the onshore and offshore upstream oil and gas operation. On the other hand, Mutalov and Musina (2014) argued that The Offshore Petroleum Activities (Oil Pollution Prevention and Control) Regulations 2005 (OPPC Regulations) in the act to regulate the system for the waste disposal during the offshore installation. The Energy Act 2008 was developed as an instrumental to bear down the legislative regulations for the energy providers and producers in the UK (www.gov.uk, 2013). The Hazardous Waste (England and Wales) (Amendment) Regulations 2009 and the Hazardous Waste (England and Wales) Regulations 2005 imposed the procedures for Hazardous Waste/special waste including the requirements for the disposal and transportation within the strict documented framework. The Merchant Shipping (Pollution) Act 2006 assists the host government to apply Annex VI of the MARPOL 73/78 convention (Lardinios and Klundert, 2007). The aim of this act is to enhance the level of the appropriate response to different oil pollution incidents. The Offshore Chemical Regulations 2002 control the operations regarding the application and/or the release of the defined chemical substances. The Offshore Petroleum Activities (Oil Pollution Prevention and Control) Regulations 2005 established the authorised system for the oil discharge (Ali, 2010). On the other hand, the new amendment in this law in 2011 included the new aspects that encompassed all the pipelines including those which were previously not enclosed through the OPPC Regulations Act. The international discharges are clarified now under the discharges and such regulations came into action from 20011 (www.gov.uk, 2013). These are the respective policies that has emerged the successful usefulness of global law to a ddress the environmental impact of oil consumption and exploration. The fuel industry is one of the major and central industries in the worlds economy. The Aberdeen Masters in Oil and Gas Law targets to present its graduate with the proper aptitude, knowledge and the information which is compulsory to effort in this sector. The University Of Aberdeen Law School is fortunate in having one of the largest and talented team of oil and gas faculty in European Law School. In the opinion of Olawuyi (2015), the study programme is highly employable programme with the straight relations to the worldwide oil and gas companies. Aberdeen is located in the European oil and gas capital with major conferences, associated with the Oil and Gas industry in the UK. This approach would provide extracurricular experiences for the students which would assist the students in future commercial and business life. The main focus for choosing the oil and gas law as a distinctive subject is to provide a wider conceptual context so that the graduates must know the applicable area s of lubricate and gas law. Furthermore, it can be deduced that the oil and gas industry such as IOC would prefer to employ the international commercial arbitration to resolve the disputes while making international business dealing. Conclusion: The primary assertion of the essay reflects the importance of legal aspects in the Oil and Gas Industries in the world economy during its international business transaction. It has been evaluated that the host-governments allows the supreme civil rights over the countries environmental resources to overseas oil companies. The essay has also analysed the workings of the international oil and gas regimes including the contracts for commercial transaction used by the host countries. The research covers both the private and public law approaches of the segment like the mutual course and contractual activities, environmental protection and other regulation and taxation. Furthermore, the essay emphasises on demonstrating the significance of oil and gas law as a separate subject, considering its realistic and viable context. References: Abuqdais, H. A. 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