A Study of “the Element of Technology” of TEFCEL Elements in International Oil Contracts

In recent years, the element of technology in the oil and gas industry, particularly in upstream projects, has gained increasing importance due to its positive effects on optimisation of oil recovery, maximum efficient rate (MER) of the reservoirs, greater quality and quantity of the petroleum products, establishment of sustainable development, protection of environments and adding economic values to the petroleum projects. Nowadays, necessity of technology becomes an inevitable contractual element in petroleum contracts .However, the absence of technology or its relevant issues in some petroleum contracts or where technology envisages in some petroleum contracts as a soft language, but not as a mandatory element, it gives a doubt on what would be the role and effect of the technology in the petroleum contracts? Where exactly technology stands in the oil and gas industry? And what would be the parties’ rights and obligations toward the technology ? Based on the studies carried out in petroleum contracts, judicial proceedings and arbitration awards, it is concluded in this article that technology has, nowadays, become a very important part of lex petrolea, whether in the form of soft law or hard law. Further, it is also understood from this writing that the concept of the unitisation, transfer and development of technology (UTDT) as one of the nine elements of the TEFCEL presents, actively, in the petroleum contracts, becomes a demand of the host countries and/or NOSc, so that they oblige the foreign investors and/or IOCs to carry out the petroleum operations and to fulfil the terms and conditions of the petroleum contracts in their countries, according to the requirements of the UTDT .Finally, it is resulted from this study that the mandatory requirement of technology becomes, nowadays, a predominant environment in the oil and gas contracts, to the extent that it is either considered to be mandatory requirements of law or contract, the breach of which shall impose legal and contractual sanction against the defaulting party and will give a right to the innocent party even to terminate the contract and to seek damages.