Provided that appropriate tax and legal advice is sought and received, and that all related legal issues are adequately addressed in split contracts and “bundled” in the WAG, the benefits offered under a shared structure can be substantial. In some cases, asset owners may want to use an alternative to the “full wrap” structure. For example, if plant operators already have some of the equipment to install in the plant and the EPC contractor does not need to procure that equipment, adjustments can be made to the EPC contract to accommodate it. To protect against design risks, a project company must ensure that all planning responsibilities are assumed by a contractor – usually the onshore contractor who has established a presence in the host country. The guarantor according to the WAG would then have to provide a guarantee for the contractors` design obligations. Where the offshore contractor provides certain offshore planning services on the basis of the receipt of the onshore contractor`s design contract, the onshore contract should include provisions that require the offshore contractor to ensure that this design contract is suitable for that purpose. A split structure can be launched at any time before the project documents are executed. Ideally, a project company and an EPC contractor would agree on the terms of the individual EPC contract (and scope of work), and then divide the agreements into onshore and offshore components. This can lead to hastily crafted sharing contracts, as the parties to the project have concluded their business agreement and want to start work as soon as possible.
Sufficient time should always be allowed to draft the WAG and spin-off contracts and to ensure that there are no gaps in liability or scope at the time of the merger. Pricing structures may also vary depending on the needs of the owner of the asset. The most predictable pricing model for P&D companies is a fixed price, where the EPC contractor is hired for a single, fixed price for the entire scope of work. Alternatively, P&D companies might opt for a less predictable structure that offers additional flexibility. B as a fixed pricing model, in which the agreement sets a fixed price for the entire scope of work of the project, but includes flexibility for adjustments for escalation if certain criteria are met. . . .