The last few years, and even more remarkably, the last few months have witnessed dramatic changes in the politics and social/economic aspirations of many countries of the. Free World and these "new" forces exert an ever increasing pressure on the multinational companies, mainly on the petroleum industry.

Although many of these changes can be evaluated only qualitatively, at least those affecting the economies of anyone particular foreign venture must be assessed quantitatively and their relative importance judged in the changing circumstances. The qualitative aspects to be considered were discussed in the July – September 1972 issue of the JCPT: "Factors to be Considered in Foreign Investment Ventures (Part 1)".

The present paper attempts to summarize, to evaluate and to compare quantitatively some of the currently prevailing international petroleum exploitation agreements and speculates on possible future events which might influence the international petroleum industry in their foreign operations.


An outstanding feature of the international petroleum business is the economic interdependence it has created between three groups of countries: the producing countries, i. e. the "have countries " of the Middle East, North and West Africa. South America and Southeast Asia, the large consuming "have-not" countries of Western Europe and Japan, and the two large consuming "have oil in wrong place countries" of North America, namely Canada and the U. S. A. The interconnecting link between national oil companies, with the majority of them having their home base in the United States. Tile world oil industry does not exist thus in isolation, but it forms an integral and very important link of the entire world economy. This presentation will examine this interdependence in the past, today and as it could develop in the future.


Until the middle of the 1950's, the international oil companies operated throughout the world almost exclusively under concession type agreements granted to a few major oil companies before and immediately after World War II. However, during the 1950's numerous changes in the older concession terms were introduced and new types of agreements have been developed. Currently in foreign operations throughout the world, there are four major types of such agreements in effect, namely:

  1. "The Old Concession Types". which still prevail in several of the OPLC countries of the Middle East, Africa and Ecuador;

  2. "The Production Sharing or Profit Types", which started in Indonesia and are currently gaining ever increasing favour in many of the developing countries, which recently opened their doors to oil exploration; Philippines, India, Thailand, Bulivia, Peru, Nigeria, etc.;

  3. "Partnership or Participating-Types" such as those concluded during the last few years in Iran, Saudi Arabia, Kuwait, Abu Dhabi and Libya; and

  4. "The Service Contract Agreements", A few which have been concluded in Venezuela, Iraq and Iran during the past several years.

Each of these four major types of agreement exhibits many variations, not only from one country to another, but also within the same country. However, despite these variations. each of the above four major groups has its own characteristics.

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