Location references in petroleum contracts – some observations

It has become a matter of debate how the location of oil, gas and mining projects can or even has to be specified. Given that listed extractives companies in the EU, Canada and the US will soon have to disclose payments to governments on a “project basis”, this is just as much a tricky as it is a relevant subject. After all, what value are such disclosures going to have for the communities if we can’t relate them to any operations on the ground in a particular place?

A review of the 800+ petroleum contracts in our repository, however, provides a starting point – not least because most legal definitions of extractives “projects” are tied to the underlying contractual arrangements, e.g. with the wording of the EU directives: “the definition of project covers the operational activities governed by a single contract (or similar legal agreements)”.

So here are a few observations on location references in petroleum contracts:

  • The vast majority (780 out of the 806 contracts) reference the location of the contract area. At least 308 of these contracts define the contract area explicitly in regards to a “block” (i.e. “block 2”), while many more reference a blockname (i.e. “area 25/34”). A minority of contracts uses the name of oil fields to refer to the contract area (i.e. “Amu Darya”), whereas oil blocks can be named after oil fields as well.

→ It therefore seems fair to say that it is industry practice to define contract areas in reference to oil blocks. Such blocks are defined by governments and are captured on the frequently published “concession maps” – as we reproduce them in the OpenOil concessions map.

  • A considerable number of contracts further references the location by providing:

1) a map, usually found in the annex (in fact, there are 69 contracts that have such a map listed as “Annex B”)

EXAMPLE 1: Portugal, Camarao 235 – see page 4
EXAMPLE 2: Mongolia, Nemget-IV –  see page 26
EXAMPLE 3: Mozambique, Pande / Temane blocks – see page 113

2) the GPS coordinates of the contract area (mostly found in the annex under “Description of the Contract Area”)

EXAMPLE 1: Angola, Block 9-09 – see page 54
EXAMPLE 2: Gambia, Block A 5 – see page 99
EXAMPLE 3: Timor-Leste / Australia, Area K – see page 44

    3) the GPS referencing system, that is required to make sense of the coordinates (such as “WGS-84” or “UTM” which are two of the most popular of such referencing systems)

→ It is difficult to say to which degree these extra referencing features (map, coordinates, referencing system) can be considered industry practice, other than that they are very common. More research would be needed that takes a closer look at the contract body in the public domain and that takes into account some of the characteristics of publicly available contracts, such as the frequent omissions – some of which indicate a map or even the coordinates have been omitted.

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