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Consortium

Definition

Consortium refers in the oil and gas and petrochemical industry to a group of individuals or legal entities or a combination of individuals and legal entities which mobilizes their respective resources for the accomplishment of a task going beyond the capabilities of each member of the group.

Comments

In a consortium, the legal entities may be registered companies, associations, institutions, or government representatives.

A consortium is not a legal entity by itself, the interests, rights and duties of the consortium are supported directly by the individuals or legal entities of the members of the consortium.

A consortium is materialized by a contract called Consortium Agreement.

This contract signed between all the members describes typically:

 – The purpose of the consortium, such as an oil and gas project

 – The duration

 – The members of the consortium with the description of their respective contribution to the common purpose of the consortium

 – The Committees representing the members of the consortium and to drive the good execution of the consortium task.

 – The rights and obligations of each member between each other and with third parties

 – The rules to share the costs of the consortium

 – The rules to handle the licenses and intellectual properties

 – The liabilities between each other and with third parties

In fact a consortium is running not as a company but as a contract, so that the Consortium Agreement prevails between the members regardless the contracts signed with third parties such as a customer.

To perform successfully a consortium it is essential that the scope of work such as defined in the Consortium Agreement between the members does match with the terms of the customer’s contract.

In case of failure of the consortium to execute the common task according to plans, each member shall be solely liable for any loss, damage or injury to third parties resulting from its faulty actions or omissions from non-respect of the provisions of the Consortium Agreement.

The communication between all the members and with the third parties is a key factor of success for a Consortium.

Through the Consortium Agreement, each member is committed to allocated the necessary manpower and competences in respect with his own scope of work.

Therefore each member shall be fully responsible to meet its own commitments such as defined in the Consortium Agreement until full completion of the purpose of the consortium.

For more information and data about oil and gas and petrochemical projects go to Project Smart Explorer

3 Comments to “Consortium”

  1. We are a leading ship manager in region who look after 3rd party sailing oil and gas and offshore oil and gas assets and support vessels deployed worldwide.
    – Every time a new opportunity to participate in a business opportunity is offered to us in Indonesia, we are asked by Private bodies ( Oil companies) or local Govt bodies to enter in a consortium agreement with other stake holder.
    – There are usually 3 stake holder- Ship owner with majority shares+ His partner with minority shares in asset and us who have no share or stake in revenue generated or shares of asset.
    – We offer our services for which a fixed sum of money is paid.
    – If we sign Consortium agreement, we are exposed us to a capped liability and sometimes uncapped liability.
    – Due to this capped or uncapped liability and a “Joint and Several liabilities clause”, we are reluctant/unable to sign consortium and have to let these opportunities go by.
    – We are keen to sign consortium but would like to identify and deploy safeguards against the known and unknown risks. Is there any product( Insurance cover or any other thing) which can safeguard us against the liability and other risks.
    – Will the insurance cover be for a range of liability or on a case by case basis or can we secure a blanket cover.
    – Am keen to identify and find out all details on this in order to move further on Consortium.

  2. You have brought up a very excellent details , regards for the post

  3. Hi there. Simply just planned to request a simple dilemma.

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