Petroleum Disputes: An Analysis of Current and Emerging Patterns

Abstract

The complex nature of petroleum industry stakeholders’ engagements and
commercial agreements makes them susceptible to varying disputes. Right from
the stages of exploration, drilling to refining and distribution of petroleum
products, there are multifaceted contractual dynamics and huge cost implications
that could generate potential disputes. This makes it mandatory for parties to
envisage, negotiate and incorporate appropriate dispute resolution mechanisms in
their agreements. Also, the number of parties involved in the oil and gas industry,
along with the multi-party complexities of oil and gas exploration and production
activities and agreements, may increase the potential for disagreement in the
contracts signed between the parties. The paper discusses the nature and causes of
petroleum disputes. It also reviews decided arbitral awards and judicial authorities
relevant to the subject matter. This paper examines current and emerging patterns
of dispute resolving the petroleum industry and the different dispute resolution
mechanisms adopted to resolve them. Particularly, the paper examines the historic
role of the conventional litigation approach in oil and gas dispute resolution. It also
underscores the imperativeness of the innovative contributions of Alternative
Dispute Resolution (ADR) options in determining oil and gas disputes faster while
preserving the overall economic objectives of parties’ contractual agreements. The
paper employed a qualitative approach using different relevant materials to unravel
and explain the nature of Petroleum disputes and mechanisms for resolving them.
The paper concludes by making recommendations.