INOGATE Umbrella Agreement
Developed within the institutional "pillar" of the INOGATE Programme, the INOGATE Umbrella Agreement (UA) is an interstate agreement that sets out an institutional system designed to rationalise and facilitate the development of interstate oil and gas transportation systems and to attract the investments necessary for their construction and operation. INOGATE intervened at a moment when all the interstate agreements reached under Soviet times were cancelled and no legal agreement or rules for co-operation existed between the newly-independent states.
The INOGATE Umbrella Agreement allows for maximum flexibility in the institutional structure of specific projects while establishing a commonly agreed series of parameters compatible with international financial, technical and operational standards, in order to minimise investment risks, maximise profitability and, consequently, attract foreign investment on the best possible terms.
The Agreement works in a simple way. The Umbrella Agreement itself sets out the "principles" document defining the overriding rules for co-operation. Then additional protocols are signed for specific projects in the framework of the Umbrella Agreement. These additional protocols are elaborated by Participating Countries and set out the terms for specific projects. By preparing protocols under the framework of the Umbrella Agreement, a project benefits from the following:
It is a clear signal of the will of the signatory States to co-operate with each other in order to facilitate, and indeed to make possible, the commercial exploitation of the oil and gas reserves of the concerned regions by arranging for its efficient transportation to the energy markets of the EU.
It introduces the concept of a Common Operator of an interstate transportation system. This avoids the complicated and inefficient operation of the system (such as pipeline or multi-modal transport) by several different national authorities.
It also introduces the concept of a Common Project Manager, responsible for the oversight of the construction of an interstate transportation system, in order to ensure the synchronisation and observance of common technical specifications in the different national segments.
It provides a uniform guarantee towards investors and towards each other that the Participating States shall not implement any subsequent legislative amendments which are detrimental to existing projects.
It provides for the elaboration of commonly agreed technical specifications and operating procedures.
It provides for a commonly agreed regulation of environmental protection corresponding to international standards in the field.
It provides for a mechanism to settle disputes between any combination of States, investors and third parties on the basis of the rules of the ICC and UNCITRAL.
The Agreement does not modify or put an end to other treaties in force relating to the oil and gas transit sector, nor does it preclude State Parties from entering into other forms of intergovernmental co-operation in this sector. The Agreement contributes to the development of rules governing international oil and gas transit activities. The Agreement can also be a catalyst for the effective application of other transit rules established pursuant to other important Treaties in the oil and gas sector (e.g. Energy Charter Treaty).
The Umbrella Agreement is open to all interested countries regardless of its status as an oil and gas producing or transit country.
The INOGATE Umbrella Agreement is in force as an international treaty as of February 2001.