Procurement And Contracting Essay

974 words - 4 pages

Oil and Gas is a constantly changing business with new areas of exploration on the rise. There have been more companies pushing for development in certain geographic areas. With this contestant evolution of new development contract must be put in place for ownership purpose, which allows companies to develop by being legally protected. Going forward we take a look and how oil and gas companies are awarding agreements through mutual agreements of offer and acceptance, consideration of down payment, capability to perform work and confirmation of legal purposes.
Mutual agreements of offer and acceptance can be found in many realms of the Oil and Gas industry in particular agreements are found in the developmental stages of same interest areas. These areas are common place for many oil and gas companies and are sometimes owned by both companies. General there is a contract agreement put in place between two companies specifying the ownership between the two in that particular area. This gives both companies the mutual agreement of offer and acceptance between the two companies. Generally the companies are awarded a specific allocation with certain stipulations. As stated by “AMIs is frequently incorporated in purchases and sales of fractional leasehold interest and farmout agreements, where a third part undertakes drilling obligations for a company wanting to maintain its leasehold interest.” This agreement allows companies to facilitate what they deem appropriate for both parties in doing so they work out an agreement of offer and acceptance.
Another thing to consider within procurement/contacting in the oil and gas industry is the consideration of down payment. Many oil and gas companies contract subcontractors to do work on platforms such as welding or pipefitting. Within these jobs are agreements from the company to the subcontractor. These contractual agreements specify scope of work, how many workers are need and so forth. These contracts have to determine estimated cost for the scope of work, scheduling and what the subcontractor deem fitting between the company and subcontractors as far as payment. Currently many oil and companies contract out because the scope of work has become very technical and some points but also have created larger scopes and deadlines. Therefore, many companies look to subcontractors to help complete the job. As it stands one company redefined its contract work breakdown into related contracting modules, allowing it to reassign some contractor jobs and save 13% on goods and services. Global companies should also strive to manage suppliers at the global level and ensure they’re working with the supplier’s a team, which adds value (and reduces frustration). (Nava and Rivolta, 2013) If companies, don’t agree on price it can damage to the project and companies will lose out and that subcontract/company relationship.
Another detail that is imperative in negations with contractions in the oil and gas industry is the...

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