Joint Ventures in the International Petroleum Industry
Authors: Stevens Leonard C. 
Published: December 2007

This paper was prepared for presentation at the 47th Annual Fall Meeting of the Society of Petroleum Engineers held in San Antonio, Tex., Oct. 8–11, 1972. Permission to copy is restricted to an abstract of not more than 300 words. Illustrations may not be copied. The abstract should contain conspicuous acknowledgment of where and by who the paper is presented. Publication elsewhere after publication in the JOURNAL paper is presented. Publication elsewhere after publication in the JOURNAL OF PETROLEUM TECHNOLOGY or the SOCIETY OF PETROLEUM ENGINEERS JOURNAL is usually granted upon request to the Editor of the appropriate journal provided agreement to give proper credit is made. provided agreement to give proper credit is made. Discussion of this paper is invited. Three copies of any discussion should be sent to the Society of Petroleum Engineers office. Such discussion may be presented at the above meeting and, with the paper, may be considered for publication in one of the two SPE magazines.

Introduction
Various forms of joint ventures have been a way of life in the petroleum industry, dating back to the drilling partnerships formed in the early days of the Pennsylvania oil boom. Partnerships, farmouts and unitized operations Partnerships, farmouts and unitized operations are familiar modes of operating in the domestic industry. On the international scene, joint ventures have been just as common as in domestic operations, but usually on a much broader basis.
I propose to examine the reasoning behind their formation and to review some of the typical examples of joint ventures in the international industry. With this background, I shall discuss the more important features of joint venture agreements, operating agreements and joint bidding arrangements.
Finally, I shall conclude with some speculative remarks about future trends in international joint ventures.

REASONS FOR JOINT VENTURES
What are the usual reasons for setting up a joint venture?
To raise sufficient capital for the venture contemplated, To spread the risks inherent in any oilfield venture over several projects; enabling each partner to enter a larger number of individual ventures, To develop or, if already developed, to exploit a field jointly as a unit rather than as a number of individual leases, thereby decreasing costs and improving efficiency of extraction for the benefit of all participants, To avoid unnecessary capital outlay in the provision of downstream facilities such as crude oil pipelines, tanker loading facilities, refineries, product storage, product handling and distribution facilities, To enable companies with existing downstream facilities to gain control of a continuing supply of crude oil, reasonably close to their installations and markets, by "buying into" fields discovered and/or developed by other companies who do not have the downstream facilities, or the need for all the crude they may have discovered in a particular region.
It can be readily seen that these situations are usually more compelling in international industry than in domestic operations. Generally speaking, costs are higher, risks are greater, capital more difficult to raise and transportation, refining and markets more geographically diversified than in a domestic operation.