section ii contracts for intermediate level. general standard 1101 – design studies intermediate...

Section II

Contracts for intermediate level

General

Standard 1101 – Design studies

INTERMEDIATE LEVEL CONTRACTS2

Section II - Presentation of standard contracts

General






— CR-EP-CA-610 Use of standard contracts sets out a series of 5 rules

— Structure of contracts

— Typical structure of services contracts – Technical assistance

— Typical structure of operations contracts

— Typical structure of project contracts

— List of standard contracts

— Standards contracts in E&P environment

General










General



Two main structures:

— General Conditions (GC) supplemented by Particular Conditions (PC) which will further detail contents of the GC in consideration of a particular project. Examples:

— Technical assistance contracts (standard 1701) and the General Conditions of

Purchase (GCP standard 1708)

— Stand-alone proprietary standard contracts, to be completed as appropriate throughout the standard in consideration of a particular project. Examples:

— FPL and PEX line standard contracts

GeneralStructure of contracts



— Whilst it is important to first understand the structure, it will also be important to then review definitions that have been created to fit the requirements of each standard contract

The definitions should be applied throughout when creating annexes and appendices and not modified

— Standard contracts will also refer to INCOTERMS for delivery conditions (INCOTERMS 2010)— For purchase of equipment: parties may rely on INCOTERMS. Detailing elements

as required by such INCOTERMS (i.e. place of delivery, etc)— For other more complex standard contracts (i.e. EPSCC PEX line): the rights and

obligations of the parties for delivery will be explicitly stated within the standard contract itself without always referring to INCOTERMS

GeneralStructure of contracts



Contractual allocation of risks

General

Structure of contracts

Contracts RisksConstruction (Projects)

EPSC11xx

CONTRACTOR— Care of the Plant— Damage to Plant (Deductibles); but…— …insured (CAR arranged by CY)

COMPANY— Bears deductible’s differential — Blow-Out, Pollution from Equipment

Drilling and drilling related contracts

12xx-13xx

COMPANYBlow-Out, loss of down-hole tools Existing Properties…

CONTRACTORLiable in case of Wilful Misconduct (no indemnities)

Purchase Order

17xx

COMPANYBlow-Out, Marine retrieval, CY Properties…

CONTRACTORLiable in case of Wilful Misconduct (no indemnities)










General



GeneralTypical structure of services contracts – Technical assistance



A few important messages

— The Contractor shall carry out the Service as an independent Contractor

— Contractor and its employees, agents or servants cannot be considered as

employee(s), agent(s) or servant(s) of the Company

— In all cases, the Contractor shall be responsible for the direction of work undertaken

by his personnel who remain under the authority of the Contractor

— Services should be described in order to evidence the necessity to use such services

as no equivalence or availability in-house

— Identify clear deliverables:

— Activity Reports and a Final report that testify of the service rendered

— Lump sum amounts paid according to identified Milestones

GeneralTypical structure of services contracts – Technical assistance










General



GeneralTypical structure of FPL contracts










General



GeneralTypical structure of project (PEX) contracts










General



GeneralList of PEX standard contracts

Engineeringconstruction 1112

EPSCOnshore

1111EPSCOffshore

2112EPSCOnshore

2113EPSCCOffshore

2114EPSCCOnshore

2111EPSCOffshore

1116SPSEPSF

1118LightEPSCC

1120Marinewarranty servicies

1115Transport & installation

1113EPSCCOffshore

1114EPSCCOnshore

XXXXCertificationauthority

2116SPSEPSF

2118LightEPSCC

2120Marinewarranty servicies

2115Transport & installation

2708GC of purchasing

2110Equippackage

1117CompensatedCFT

1151Maintenance & inspection Engineering

1140Sitepreparation

1323Floatelchartering

1130Miningoperations

2151Maintenance & inspection engineering

2140Sitepreparation

2323Floatelchartering

2130Miningoperations

2104Basic engineering

1000 – Contract under French law2000 – Contract under English law




Pre-projectEngineeringDesign Studies

2101Design & engineering studies

1101Design & engeneeringstudies

Basicengineering procurement


1110Equipmentpackage

1117CompensatedCFT




2117CompensatedCFT


Geotechnicalsurvey 1412

Offshoregeotechnical survey

Controlsystems 2110

Equipmentpackage






Rotating machineries 2110

Equipmentpackage


Line pipes2708GC of purchasing


Pumps2110Equipmentpackage


Fieldoperations 1151

Maintenance & inspection engineering

1152Intelligentpigging

XXXXEarly productionfacilities

1150General operations &maintenance servicies

2151Maintenance & inspection engineering

2152Intelligentpigging

2150General operations &maintenance servicies




GeneralList of FPL standard contracts

Drilling and well services 1206

Offshore drilling services1210Well drilling related services

1207Onshore drilling services

2206Offshore drilling services

2210Well drilling related services

2207Onshore drilling services

Logistics services 1302

Support vessel services1243Diving services

2302Support vessel services

2304Helicopter charter services

2306Fixed wing aircraft charter services

1310Vessel spot services (BIMCO supply time 89)

1304Helicopter charter services

1306Fixed wing aircraft charter services

1324Catering & housekeeping services

2310Vessel spot services (BIMCO supply time 89)

2243Diving services

2324Catering & housekeeping services










General


Timeline


General Standards contracts in E&P environment

Exploration Appraisal Field development Field operations Field

abandonment

Exploration

Appraisal

Conceptual Studies

Field operations & export

Pre-Project

Project

Construction

Drilling & completion

Abandonment

Drilling




Exploration Appraisal Field development Field operations Field

abandonment

Exploration

Appraisal

Conceptual Studies


Pre-Project

Project

Construction

Drilling & completion

Abandonment

DrillingIdentification

of needsConcept selection Drilling Evaluation Completion Production Intervention

Timeline



Typical activities during these drilling/well services phases are:— Identification of needs (Design/engineering phase - Drill well on paper)— Concept selection (Well design simulation on a case well )— Drilling (such as Directional Drilling (DD), Measurement While Drilling (MWD), Logging

While Drilling (LWD)...)— Evaluation (such as mud logging, coring…)— Completion (such as lower & upper completion...)— Production (such as liner & tubing hanger running...)— Intervention (such as stimulation, well testing…)

GeneralStandards contracts in E&P environment

Identification

of needsConcept selection Drilling Evaluation Completion Production Intervention




Exploration Field operations Field abandonment

ExplorationExploration


Appraisal

AppraisalAppraisal

Conceptual Studies

Pre-Project

Field development

Project

Construction

Drilling & completionDrilling & completion

Abandonment

DrillingDrilling

Timeline




Pre-projectApparaisal & conceptual

Preliminary study

Conceptual study

Apparaisal works

Pre-project study

1101 – Design studies

1412 – Offshore geotechnical survey

Increasing complexity and number of players:

Project sanction

Basic engineering

Development project

Installation commis-sioning

Detail engineering & construction

Start-up

1104 – Basic engineering

1113 – EPSCC for FPSO or SURF

1110 – Equipment

package - LLI1151 – MIEC 1120 – MWS

1708 – Line pipes procurement

1116 – EPSF for SPS

1115 – T&I FIR

ST

O

IL

1150 – Ops. & Maint.

Appraisal

Appraisal

Conceptual Studies

Pre-Project

Field development

Project

Construction




Project sanction

Basic engineering

Pre-projectApparaisal & conceptual

Preliminary study

Development project

Installation commis-sioning

Detail engineering & construction

Conceptual study

Apparaisal works

Pre-project study

1104 – Basic engineering

1113 – EPSCC for FPSO or SURF

1110 – Equipment

package - LLI1151 – MIEC 1120 – MWS

1708 – Line pipes procurement

1116 – EPSF for SPS

1115 – T&I

1150 – Ops. & Maint.

1101 – Design studies

1412 – Offshore geotechnical survey

Increasing complexity and number of players:

FIR

ST

O

IL

— More and more interfaced contracts— More and more companies:

— For COMPANY: shareholder & participants— For CONTRACTOR: subcontractor and vendors

Start-up

General






— Outline presentation

— Main characteristics

— Highlight on intellectual property

— Highlight on confidentiality




Dedicated to conceptual studies or pre-project studies such as calculation notes, data sheets, specifications, drawings, and the like

— Contract value in the range of 50 to 500kUSD— Duration between 1 to 6 months— Performed in the premises of the specialist engineering contractor, utilising in-house

facilities and data

Standard 1101 – Design studiesOutline presentation

Identification

Pre-project concept selection

Basic engine-

ering

Detailed design Construction Operate

maintain Abandon

1101 – Design Studies



Standard 1101 –Design studiesMain characteristics

COMPANY partners

PARTICIPANTS who have entered into an operating agreement with COMPANY are defined (if applicable). The PARTICIPANTS and their percentage stake should be added to the Recitals section of the Agreement.

Result of CONTRACT

ENGINEERING DELIVERABLESNote: PLANT means the permanent facilities to which the BASIS of DESIGN relate.

Specific COMPANY inputs

BASIS of DESIGN

Locations where WORK is carried out

ENGINEER’s offices – no interface with other locations

EFFECTIVE DATE of CONTRACT (Art. 21)

EFFECTIVE DATE to be stated by Project under article 21

Signatories of the CONTRACT

COMPANY & ENGINEER

Object of the CONTRACT (Art. 1)

Preparation and issuance of ENGINEERING DELIVERABLES

Law governing the CONTRACT (Art. 18)

Laws of France (1101) / Laws of England (2101)

Language of the CONTRACT (Art. 3.4 iii)

English

Settlement of disputes (Art. 19)

Arbitration as per ICC rules. (Three arbitrators).Arbitration to be held in Paris and conducted in the English language





— Highlight on intellectual property—Context and definition—1101 related articles—Best practices





— The term intellectual property refers broadly to the creations of the human mind

— Intellectual property rights:

— protect the interests of creators by giving property rights over their creation

— relate to items of information or knowledge, which can be incorporated in tangible

objects and at the same time in an unlimited number of copies at different

locations anywhere in the world

— characterised by certain limitations, such as limited duration in the case of patents

— Countries generally have laws to protect intellectual property

Standard 1101 – Design studiesHighlight on intellectual property — Context and definition



— Intellectual property is usually divided into two branches:— Copyright, which relates to artistic creations— Industrial property

— The expression “industrial property” covers the following categories: — patents to protect inventions (new solutions to technical problems)— industrial designs (aesthetic creations determining the appearance of industrial

products)— trademarks, service marks, commercial names and designations, including

indications of source and appellations of origin, and protection against unfair competition




— Industrial Property Rights (IPR) can be transferred by the owner to the user, by

contract or sell (transfer of ownership) or by granting a license

— A license to use may be subject to specific restrictions:

— Geographical

— Time

— Exclusivity

— A license to use may require payment to the owner of a royalty fee




Standard 1101 – Design studiesHighlight on intellectual property — 1101 articles elating to industrial property

Industrial Property Rights (Art. 14)

Each Party retains their respective INDUSTRIAL PROPERTY (IP) RIGHTS developed, acquired or obtained prior to the EFFECTIVE DATE.During execution after EFFECTIVE DATE:— IP developed wholly or mainly on ENGINEER’s IP remains ENGINEER’s.— All other IP developed will belong to COMPANY

For the purpose of the CONTRACT and engineering and construction of the PLANT(s) or part thereof, and COMPANY’s future operations and maintenance of the PLANT, and export, sale and use of the products of the PLANT, ENGINEER grants COMPANY, the PARTICIPANTS, its/their AFFILIATES an irrevocable world-wide royalty-free licence to use, or have used, any INDUSTRIAL PROPERTY RIGHTS in ENGINEER's possession

Property Rights (Art. 15.2)

ENGINEERING DOCUMENTS shall, as of commencement of the WORK thereon, become COMPANY property



This is a specialised subject and you should seek assistance from relevant IP specialists within the company if bidders request to change articles

— For your information, bidders do not like in general that if IP property developed during the execution of the project cannot be clearly attributed to either COMPANY or CONTRACTOR then it should become CONTRACTOR IP and not COMPANY IP

— Bidders will be willing in this case to grant world-wide royalty free licenses to COMPANY

— If bidders insist and demonstrate that their IP is major for their business and sufficiently innovative, their case will be examined

Standard 1101 – Design studiesHighlight on intellectual property — Best practices



In the case of joint contribution by COMPANY and CONTRACTOR to the development of a technical concept or technical information after EFFECTIVE DATE:

— The principle of co-ownership of IPR between the two parties and a procedure for notification and filing the new rights may be introduced into the contract

— Model provisions for co-ownership are included in annex to the PEX sheet on Intellectual Property Rights (PEX sheet N°10) for major EPC contracts




Model provisions for co-ownership under standard 1101:

ENGINEER and COMPANY – Jointly Co-owned INDUSTRIAL PROPERTY RIGHTS

Whenever any right, title or interest in INDUSTRIAL PROPERTY RIGHTS developed, acquired or obtained after EFFECTIVE DATE in connection with the WORK and/or the CONTRACT is based upon technical concepts or technical information of both COMPANY and ENGINEER but cannot be identified as belonging either to COMPANY or ENGINEER in compliance with the rules specified in sub-Articles 13.1.2 and 13.1.3 above, such right, title or interest in INDUSTRIAL PROPERTY RIGHTS shall be co-owned by ENGINEER and COMPANY

ENGINEER shall notify COMPANY as soon as such right, title or interest is made or obtained and the PARTIES shall then decide who shall be in charge of corresponding filing applications in the names of COMPANY and CONTRACTOR

Should the case arise, consult corporate contracts (OPS/CA/PEX) for assistance








— Context and definition

— 1101 related articles

— Best practices




— Confidential information is information of the highest importance

— It must be kept confidential for the business interest of the company that owns it or has been granted access to (e.g. through a confidential undertaking of any kind with the company that originally owns it)

— In some case, confidential information may also be referred to as proprietary information

— Some proprietary information may be subject to legal registration (copyright, patent, or other intellectual property or legal rights) in which case it is by definition public (and not confidential)

Standard 1101 – Design studiesHighlight on confidentiality — Context and definition



— Confidential information must be protected

— Its wrongful disclosure may possibly severely harm its owner

— Confidential information may be:

— disclosed to one or several third party(ies)

— received from one or several third party(ies)

— It is essential that all involved parties comply with confidentially provisions




— During a Call For Tender (CFT) process, the bid package will require that bidders acknowledge that information disclosed by company is confidential.

Company confidential information will only be disclosed once a confidentiality undertaking (Confidentiality agreement) has been signed. Never before

— The CFT process will be covered from then on by confidentiality undertakings between the parties

— At a later stage the letter of award and finally the contract will continue to sustain these confidentiality undertakings

— Confidentiality undertakings will survive the termination of the contract as stipulated within the contract





Confidentiality(Art. 16.1)

Unless he obtains prior APPROVAL, ENGINEER shall neither before nor after the completion of the WORK or termination of the CONTRACT, disclose or make available to a third party or use either directly or indirectly any information and data obtained either from COMPANY or otherwise by ENGINEER in connection with the performance of the WORK, and/or which is stamped by COMPANY to this effect.

ENGINEER shall be liable for any disclosure of information and/or data to a third party unless he can provide written evidence that:(i) such information and data was in the public domain prior to disclosure to ENGINEER, or(ii) such information and data has become part of the public domain through no fault of ENGINEER, or(iii) such information and data was given without restriction to ENGINEER by a third party duly authorised or otherwise entitled to do so, and who did not receive the same in any way from COMPANY, or(iv) COMPANY has given its prior APPROVAL.

Although some portions of such information and data may be or become subject to one or more of the above exclusions, particular combinations thereof will not fall within these exclusions unless the combination itself falls therein.





The above exclusions shall not apply to information of a specific nature disclosed to ENGINEER for the performance of the WORK where information of a general nature relating to the same matter was already in the public domain or in ENGINEER's possession prior to such disclosure to ENGINEER.

ENGINEER furthermore undertakes to limit access to such information and data to those of his personnel reasonably requiring the same for the performance of the WORK and the CONTRACT and not to use any of such data and information in any way other than for the purpose aforesaid.

If disclosure of such information and data is required for the performance of the CONTRACT and COMPANY consents in writing to such disclosure, ENGINEER undertakes to ensure that the recipients of such information and data sign an undertaking identical to that contained in the present provisions. ENGINEER shall remain liable for and shall defend, indemnify and hold harmless COMPANY from any breach of confidentiality by such recipients.

ENGINEER, even when relieved of his obligation of confidentiality by the above exclusions, shall retain confidential the fact that information and data were supplied by COMPANY for the performance of the CONTRACT as well as any correlation, identity, similarity or relation between (i) the information and data acquired from COMPANY and/or (ii) the information and data which may become part of the public domain or received from a third party.

ENGINEER shall take all necessary and/or appropriate steps to ensure that his personnel and SUBCONTRACTORS adhere to and comply with the provisions of this sub-Article 16.1.





The provisions of sub-Article 16.1 in respect of ENGINEER's obligations regarding COMPANY confidential information and data shall apply mutatis mutandis in respect of COMPANY's obligations regarding information and data which has been referred to in writing by ENGINEER as confidential.


Each PARTY in breach of the confidentiality obligations under this Article shall indemnify, protect and hold harmless the other PARTY from and against any and all claims, suits, costs (including legal expenses), liabilities, judgements or demands suffered or incurred in respect thereof.





<< Obligations with respect to PROCESS INFORMATIONSubject to the provisions of sub-Article 16.1, with respect to PROCESS INFORMATION, ENGINEER undertakes to have signed with PROCESS LICENSORS at the EFFECTIVE DATE, confidentiality agreements and shall provide COMPANY with a copy of such agreements when signed.

ENGINEER undertakes to limit the access to such PROCESS INFORMATION to only those SUBCONTRACTORS duly authorised by COMPANY, and only for the performance of the WORK.Furthermore, ENGINEER undertakes to have, at EFFECTIVE DATE, confidentiality agreements signed by such SUBCONTRACTORS. ENGINEER shall provide COMPANY with a copy of such agreements when signed. >> (delete if not applicable)



— Company receives a lot of Contractor documentation during the life a project

— The follow-up of confidential information needs to be organised and therefore the confidential information clearly identified

— This issue is often contested by Bidders who will request a full mirror article for confidentiality that would apply to all their documents.This is not acceptable:— Not all of their information is confidential— Should all their information be confidential this would be very difficult for

COMPANY to manage


End of Section II

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