Unitization and Determination of Tract Participation in Unit Operating Agreements

Countries with hydrocarbon resources, including Iran, typically prefer to break up their oil-rich areas into blocks and then assign each of them to contracting companies separately to benefit from their technical and financial capability. But nature is not easily in harmony with human agreements. this can be illustrated by the many examples of oil and gas field inconsistencies with pre-defined contractual boundaries. Hydrocarbon reserves may be located between two or more contract areas that, in the absence of necessary arrangements, a disastrous competition for extracting from the joint reservoir can be formed. But the question of how contractors of two or more separate contract areas can reduce costs by leaving competition and how they can cooperate to increase the ultimate efficiency of the reservoir are the subjects which unitization and unit operating agreements have been created to deal with them. The determination of the parties’ rights and obligations in this form of cooperation comes with some challenges due to lack of sufficient information about shared petroleum reservoir. Issue analyzing shows that contracts’ terms and conditions must provide possibility of redetermination of parties’ participation synced with project development. Through this why eventually each party achieves their fair participation.