Knock-for-Knock Indemnities and their Application in Oil and Gas Contracts in Argentina

Juan Pablo Santopinto, Senior Legal Counsel, Sinopec Argentina Exploration and Production Inc., Argentina

Although knock-for-knock contractual indemnities (otherwise known as ‘mutual hold harmless’ or ‘bury your own dead’ indemnities) are common to oil and gas contracts worldwide, their usefulness in oil and gas contracts in Argentina (and in most Latin American countries to that extent) is not always fully understood. Failure to comprehend the extent and aim of these indemnities and their particular interplay with liability caps, consequential loss exclusions and insurance provisions will likely cause an incorrect evaluation on contractual risk. Additionally, recent oil rig disasters have put these clauses into the spotlight, and questions have been raised regarding their enforceability, especially in a civil law country such as Argentina.

Juan Pablo Santopinto is Senior Legal Counsel for Sinopec Argentina Exploration and Production Inc. Based in Buenos Aires, Argentina, Juan Pablo provides legal, strategic and risk management advice to Sinopec Argentina Exploration and Production Inc. on subjects such as contract, oil & gas, regulatory and dispute related matters. Juan Pablo is an Argentine licensed attorney (City of Buenos Aires Bar) and has practised law in Argentina and in most of Latin America (Chile, Brazil, Uruguay, Bolivia, Peru and Ecuador, among others) for several years, mostly advising clients on International Energy and Construction contracts.

Sinopec Argentina Exploration and Production Inc. is a Chinese-owned oil & gas company, focusing on E&P in Argentina, operating 17 areas in the Provinces of Santa Cruz, Chubut and Mendoza. It remains the 3° largest operator in Argentina in terms of production. The Company is a wholly-owned subsidiary of the Sinopec Group (or China Petrochemical Corporation), a super-large petroleum and petrochemical enterprise group established in July 1998 and headquartered in Beijing. Sinopec Group is a state-owned company solely invested by the Chinese State, functioning as a state-authorized investment organization in which the state holds the controlling share. The Sinopec Group is listed on stock markets in Hong Kong, New York, London and Shanghai and was ranked the 5th in Fortune Global 500 in 2011.