What is sovereign immunity? Why is a sovereign immunity waiver needed?

b. The government of São Tomé and Príncipe contractually agreed to arbitration in the Petroleum Agreement, isn’t this good enough for a waiver?

c. Are there any other ways the São Tomé and Príncipe could waive sovereign immunity?

Question 5 – (value 13%)
Jim Hill understands that LOL has a Petroleum Agreement for Block 5 in São Tomé and Príncipe that is a production sharing contract type of agreement but asks you to explain the conceptual, legal and commercial differences between a production sharing contract and a concession that São Tomé and Príncipe is considering for future Blocks.

He also wants you to explain which form of contract LOL might prefer in the current low oil
price world.

Question 6 – (value 5%)
BTOC notes that the Petroleum Agreement provides for joint and several liability of the contractor vis-à-vis the government of São Tomé and Príncipe. BTOC is concerned that its credit rating is much better than LOL’s credit rating, and that the government will always come
to BTOC for any claim.

How can BTOC be convinced that LOL will bear its share of costs under the Petroleum Agreement? In the Farmout Agreement or in another agreement?

Question 7 – (value 10%)
BTOC negotiates and enters into a Farmout Agreement with LOL, using a form substantially the same as the AIPN Model Form Farmout Agreement. The Petroleum Agreement provides that
the government’s approval is required for all transfers of interests under the Petroleum Agreement.

a. What is the risk to LOL if it fails to get such government approval?

b. LOL requests government approval and, after 90 days, the government responds that approval is conditioned on the payment of a $1,000,000. transfer fee to the government.
Who should pay the transfer fee?

c. If both BTOC and LOL refuse to pay the transfer fee, what exposure does LOL have under the Farmout Agreement to BTOC? What exposure does BTOC have under the Farmout Agreement to LOL?

Question 8 – (value 10%)
BTOC operates a high sulfur recovery facility just outside of Las Vegas, Nevada, U.S.A. Since the fields in São Tomé and Príncipe are anticipated to have natural gas with high sulfur, BTOC wants to take a delegation from the Office of the National Petroleum Agency of São Tomé and
Príncipe (“ANP-STP”) to BTOC’s high sulfur recovery facility. BTOC would be responsible for the following costs for the members of the delegation:
??Round trip Business class airfare from Sao Tome to Las Vegas;
??Airport transfers in Las Vegas;
??Hotel accommodations at Cesar’s Palace Hotel in Las Vegas;
??Transportation from Las Vegas to/from the high sulfur recovery facility;
??Three meals a day while in U.S.A.;
??A sightseeing side trip to the Hoover Dam and the Grand Canyon;
??A per diem of US$350 per day away from São Tomé and Príncipe, as per the written regulations of ANP-STP. Jim Hill has heard about the U.S. Foreign Corrupt Practices Act, but doesn’t really understand the law very well. He asks you to advise him whether BTOC’s planned actions would create any
risk for LOL.

Question 9
LOL is the Operator of Block 5 and enters into a Service Contract with Goofy Drilling Limited (“Goofy”) for the drilling of an exploration well in Block 5. Goofy insists on including a “knock-for-knock” indemnity in the Service Contract. Jim Hill wants to understand the differences between the following types of “knock-for-knock” indemnities and what they mean
for LOL: ??Contractor indemnifies Operator for harm to Contractor’s people and property, regardless
of fault ??Contractor indemnifies Operator for harm to Contractor Group’s people and property, regardless of fault ??Contractor indemnifies Operator Group for harm to Contractor’s people and property,
regardless of fault
??Contractor indemnifies Operator Group for harm to Contractor Group’s people and property, regardless of faultLOL and BTOC enter into a Joint Operating Agreement (“JOA”) based on the 2012 AIPN
Model Form Operating Agreement. LOL is the Operator under the JOA. LOL is guilty of simple negligence under the JOA, resulting in US$10 million in damages.