Origins, Causes and Typology of Disputes in Petroleum Contracts

The adverse impacts of disputes on performance and economic of petroleum projects as well as the social costs of disputes for the parties necessitate the application of dispute avoidance strategies in petroleum contracts. In this regard, understanding the origins and causes of disputes is of great importance. Studying the disputes arisen out of petroleum contracts identifies that the disputes originate from the nature of petroleum contracts as an Economic Development Agreement (EDA); special features of these contracts or the industry, such as: uncertainties inherent in the exploration, development and production of oil and gas, vast area of the projects, social and political sensitivities toward petroleum industry specially in the oil producing countries, and the multiplicity of the contributors of petroleum contracts. Hence, concentrating on the constituent elements of contracts, disputes are attributed to either the subject matter of a contract or the specific nature of the parties to a contract.