Сonfidentiality disclosure terms in production sharing agreements

Most often, the issue of disclosing confidential information from production sharing agreements arises during the audit of an investor's expenses under a joint activity account.

A significant number of regulatory authorities, when carrying out measures to ensure the correctness of maintaining a joint account, familiarize themselves with the investor's accounting and warehouse documentation, describing it in reports or inspection acts.

Of course, investors are concerned about maintaining confidentiality to avoid passing information on to competitors, as authorized government agencies enjoy immunity from disclosure, as the audit of an investor's joint expense account is not publicly disclosed.

A duty of «confidentiality» is an obligation not to disclose to anyone information related to the performance of a production sharing agreement.

Such an obligation may vary in scope and consequences depending on the source and nature of the obligation.

Product sharing agreements have two confidentiality regimes:

1) complete non-disclosure of confidential information;

2) limited disclosure of confidential information.

Confidentiality is inextricably linked to the concept of transparency.

Although the duty of confidentiality creates a negative burden on the parties involved not to disclose information, it exists as an obligation on each individual party, with certain exceptions:

1) preparation of a report on the verification of the joint account;

2) familiarization of the commission members with the documents on the verification of the joint account of the investor's expenses;

3) transfer of documents on the verification of the joint account of the investor's expenses for the formation of certificates;

4) disclosure of data about the mineral deposit and its coordinates to assist authorities in obtaining a land plot for the investor, payment of premiums and bonuses by the investor, and fulfillment of other preliminary conditions of the production sharing agreement.

In any case, confidentiality is ensured through an arbitration order.

The confidentiality obligation places an obligation on the parties to a production sharing agreement to ensure that information identified under the confidentiality obligation is not made public.