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Environmental Issues in Oil and Gas. Breakout Session # 213 Name Bob Dickson Date June 19, 2010 Time 2:30 PM to 3:45 PM. 1. What is this thing called SubSea Systems. What is this thing called SubSea Systems. What is this thing called SubSea Systems.
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Environmental Issues in Oil and Gas Breakout Session # 213 Name Bob Dickson Date June 19, 2010 Time 2:30 PM to 3:45 PM 1
Contract Management Responsibilities • Supply Agreement templates • Advice and Consent for all Supply Agreements • Advice for negotiations Strategic Supply Chain Agreements Subcontracts • Major POs (Major Subcontracts) • - RFP responsible in Tenders • Approve Major Subcontracts • POs • Advice and Consent in negotiations • Subcontract standards and templates (RFQ, QRL, PO text) Contract Management • Special Conditions to CoC • Special Conditions to QRL • Commercial Principles • Negotiation support • Training Expert Support Tender Support Administrative Oversight; Commercial and FMC Global Integrity Responsibility
Liability Impacts Personal Libility for the loss of life and personal injuries The loss of the Deepwater Horizon Rig (estimated at $39B) Liability to the government for its emergency response
Liability Impacts Economic loss to private parties Economic loss for loss of production Pollution
Liability Impacts Fines and Penalties for environmental impact and violations Capital Flow restrictions and Shareholder Loss of Value
Liability Impacts Potential Civil Law Suites versus BP by Shareholders and others. Damage to Public Reputation
Warranty “The Guarantee period commences at the issue of the Delivery Protocol and expires twenty four (24) months thereafter, or eighteen (18) months from installation, whichever occurs first”
Warranty 3 mos. 9 mos. 1 mos Bal = 11 mos Design Fabricate Test Install 24 Months Customer Required Warranty Timeline
Intellectual Property Any IP that the Subcontractor brings to the Contract is his. As it relates to the Contract Object it is given to FMC, royalty free on a world wide basis And may not be offered to our competitors.
Intellectual Property Any IP that FMC brings to the Contract is the sole property of FMC No permission is granted to use it for the Subcontractor’s product except under the Contract
Intellectual Property Any IP developed as a result of the Contract, belongs to FMC. May not be used by the Subcontractor except under the Contract.
Defects “If Company decides that rectification work for a defect which has been discovered during the Guarantee Period can not be performed during the Guarantee Period, then Contractor’s obligation to rememdy the defect shall apply for a period of two (2) years form the expiry of the Guarantee Period .”
Liability for Personal Injury and Property Damage “Subcontractor agrees to indemnify, defend, and hold harmless XXX, its affiliates, customer and subcontractors of any tier from and against any and all claims, losses, expenses… and causes of action on account of disease or injury (including death) to Subcontractor’s employees, agents, officers….. arising out of the performance of this Contract and whether or not occasioned by the sole, concurrent or partial negligence, fault, contractual undertakings or strict liability of XXX.”
Pollution “Subcontractor shall use all reasonable endeavors to perform the Work in a manner that will prevent pollution and shall be liable for Subcontractor’s Group disposal of all pollutant substances…. Furthermore, Subcontractor is liable for all costs of control or removal of any and all debris caused by Subcontractor Group and shall, defend, indemnify and hold harmless XXX in this respect…. Subcontractor shall not be responsible for damage to or loss of the hole or casing therein or of any reservoir or for any cost of regaining control control of a wild well…”
Insurance The language of a certificate of insurance does not control the terms of an insurance policy or contract. Endorsements to the actual policies are necessary to cover this requirement.
Insurance Commercial General Liability - $5M per occurrence. Automobile Liability - $1M per occurrence Worker’s Compensation - $1M each accident.
Limitation of Liability No to a cap to liability that is something like 50% of contract value. Recommend that the overall cap should not be less than 100% of the subcontract value as an absolute minimum.
Liquidated Damages Liability “Delay occurs if the Work is not contractually completed in accordance with the milestones set out in the Contract Schedule….if the Work is delayed in relation to the milestones for which liquidated damages apply, then Contractor wqill pay liquidated damages to Company in accordance with the provisions outlined in…” “The amount of liquidated damages per milestone are as follows: i.) Hardware Milestones: NOK 25000 per day per item (approximately $5000 per day per item); ii.) Documentation Milestones: NOK10000 per day; iii.) Service Milestones: NOK 10000 per day.”
Liquidated Damages Liability “If Work is delayed in relation to the delivery or milestone dates set forth in the Contract Schedule, Contractor shall, without proof of loss, pay to XXX as liquated damages 0.5% of the Contract Price per day until delivery takes place… Contractor’s cumulative liability for payment of liquidated damages under this Article is limited to 15% of the Contract Price.”
