An oil joint venture is a temporary partnership between oil and gas companies.
An oil joint venture is a temporary association between oil and gas companies for the purpose of exploring and developing natural resources. The companies create a legal contract and abide by the relevant laws of the region while working together. Such companies are very common in regions with oil and gas fields and can include companies from foreign countries that wish to work together on projects such as site development or refinery installation.
In the oil joint venture model, both parties agree to be partners in a specific project, otherwise operating independently. They share assets, risks and benefits associated with a company. Profits and other issues associated with different business operations do not play a role in the oil joint venture as these projects are not covered by the association agreement. The boundaries of the partnership are clearly stated in the contract to avoid confusion and create a clear understanding of legal liability.
These short-term associations can be formed for various reasons. A foreign oil and gas company may want to use an oil joint venture to enter a market that it would otherwise have difficult access to. You can work with a national company to develop a website and establish a track record in the country through your work. With this experience, you can begin applying for contracts and leases on your own to further develop a foothold in the country.
Another reason for an oil joint venture could be asset inequality. A small oil and gas company may not be able to afford the costs associated with site development, but they can control a potentially valuable facility or site. Instead of renting it out and losing out on potential revenue, you can propose a joint venture with a larger company. The large company can provide the asset support for the project, while the smaller company provides the website and both share the profits.
Notable oil joint venture deals may be the subject of reports in trade journals and financial journals. In some cases, they may reach the mainstream media because they are a matter of general public interest. Investors and other interested parties can seek participation in joint ventures if they want to know more about a specific company and the projects it is developing. Public companies are required to disclose their business operations in regular filings and these can be a valuable research resource for investors and regulators.