© 2010 PETROLIAM NASIONAL BERHAD (PETRONAS)
Module 5
Negotiation-Commercial
Commercial Academy – COHOT 14
11 March 2017
Updated/revised by : Faziah Talib Head Commercial – Sudan
Date: 1 March 2017 1Open
© 2010 PETROLIAM NASIONAL BERHAD (PETRONAS)
Module 5
2Open
MATEO CUP CAKES…..
© 2010 PETROLIAM NASIONAL BERHAD (PETRONAS)
Module 5
3Open
MATEO CUP CAKES…..
Observe the following:
The deal
Negotiation Style
Body language
© 2010 PETROLIAM NASIONAL BERHAD (PETRONAS) 4Open
Presenter
Faziah Talib
Head Commercial (Sudan)
Strategy and Commercial
Upstream Business
PETRONAS
Negotiation - Commercial
© 2010 PETROLIAM NASIONAL BERHAD (PETRONAS)
According to Gerard Nierenberg
5Open
NEGOTIATION MODULE
Negotiation-Commercial
PRE
DURING
POST
1
2
3
© 2010 PETROLIAM NASIONAL BERHAD (PETRONAS)
“ In a successful negotiation everybody wins”
6Open
NE
GO
TIA
TIO
N M
OD
UL
E
Negotiation-Commercial
1. PRE
• WHAT IS NEGOTIATION
• WHY NEGOTIATION
• NEGOTIATION PREPARATION
• TRAITS OF GOOD NEGOTIATOR
• NEGOTIATION TEAM
© 2010 PETROLIAM NASIONAL BERHAD (PETRONAS) Open 7
Negotiation-Commercial
What is negotiation ?
“ In a successful negotiation everybody wins”
According to Gerard Nierenberg
Negotiation……………
8Open
• A joint decision making process between 2 or more parties
• Each party has something The Other Side WANTS/NEED
• Involves a process of resolving conflicts between parties
• The intent is to reach a mutually agreed solutions or mutually satisfactory objectives (win-win and happy with the agreement)
© 2010 PETROLIAM NASIONAL BERHAD (PETRONAS) Open 9
Negotiation-Commercial
Why do we negotiate ?
© 2010 PETROLIAM NASIONAL BERHAD (PETRONAS)
To achieve desired results of Win-Win positions in order to…
Open 10
Negotiation-Commercial
Why do we negotiate ?
To achieve desired results of Win-Win positions in order to…
Contribute to growth and success
Build better relationship/rapport
Reach mutually agreeable solutions together
Negotiations play a major role in all aspect of our professional and personal lives.
PRE Negotiation - Preparation
11Open
Clear objective on the DEAL
Know your opponent
Formulate Strategies& Tactical Plan
Build Negotiation team
Set clear Agenda and execution plan –be in control
Lack of preparation often result in unexpected outcome which may not in our favor- Rule of thumb is to Invest at least 3X you expect to negotiate
5 Essential Steps
PRE Negotiation - Preparation
12Open
Know and understand exactly what your want and need
How to achieve the deal
1. Clear objective on the DEAL
PRE Negotiation - Preparation
13Open
Know and understand your TOS want and don’t want
Insights on TOS negotiation team and the team leader
i.e. profiling
Ability and know how to manage TOS
2. Know your opponent (the other side –TOS)
PRE Negotiation - Preparation
14Open
Defining the goal and set a limit (negotiation ‘blanket’)
Availability of relevant data/record , risks analysis and
mitigation plan, valuation analysis based on organization
approved assumption, economic market, geopolitical etc.
Develop options/Deal Design
Trading plan or concession (if required)
Negotiation Style and internal team syndication
Obtain mandate/authority from management
3. Formulate negotiation strategies and tactical plan
Skilled negotiators should always be ready to alter/tweak their planned strategy/tactics in light of new information.
PRE Negotiation - Preparation
15Open
Build cohesive negotiation team
2 Teams
– At the negotiation table negotiating with TOS
- Back room analysis team e.g. research group, strategic
planners, accountant, economics, technical team,
strategic communication team, risk profiler etc.
4. Negotiation Members/Team
PRE Negotiation - Preparation
16Open
Defining and set clear agenda and execution plan from
start through closing
Be in control by willingness to take minutes of negotiation
and drafting the agreement
Agree on timeline and duration of the negotiation
5. Set clear agenda and execution plan (be in control)
© 2010 PETROLIAM NASIONAL BERHAD (PETRONAS) 17Open
Negotiation-Commercial
Not studying up on all the issues and procedures necessary to accomplish the negotiation goals can be very costly.
i. Buys the wrong companyii. Buys it at the wrong timeiii. Pays the wrong price for the acquisitioniv. Deal aborted
Inadequate preparation can leave the negotiation team with an information deficit, which The Other Side party may be only too happy to take advantage of the situation.
Toll of not preparing
© 2010 PETROLIAM NASIONAL BERHAD (PETRONAS)
Open 18
Knowledge Skill
Attitude
• Listening• Effective Communication• Problem Solving • Rapport building• Sense of Humour
• Commercial Savvy i.e in depth knowledge of your respective ‘functional’ and to have a breath of other arrears (legal, finance, global view, operation etc.)
• Influence Technique• Conflict Management• People Management
• Professional and credible• Assertive and decisive• Self discipline and creative• Patient and careful listener• Open minded • Self Discipline• Flexible • Highly ethical
PRE- Traits of Good Negotiator
19Open
Chaos reigns in the New York City subway system when heavily armed criminals, led by a mastermind named Ryder (John Travolta), hijack a subway train and threaten to kill everyone on board unless a large ransom is paid. Dispatcher Walter Garber (Denzel Washington) uses his extensive knowledge of the transit system in a bid to outwit the hijackers and save the hostages
What can you learn from the Video?
GENERAL DISCUSSION
Open
What are your observations about this
negotiation that are relevance to E&P Core
Commercial negotiation?
How would you define negotiation?
OBSERVATIONS
Open
1. 2 parties or more2. Small Talk (Breaking the Ice)3. Discussion/Negotiations4. Proposals & counter proposals5. Demands6. Profiling7. Threats8. Bluffing9. Power of Silence10. Seeking Mandates
© 2010 PETROLIAM NASIONAL BERHAD (PETRONAS)
What is your negotiation style ?
Open
PRE- Negotiation
© 2010 PETROLIAM NASIONAL BERHAD (PETRONAS)
What is your negotiator style ?
Which Are you ….
A Donkey ?
A Sheep ?
A Fox ?
An Owl ?
Administer the questionnaire
Open
© 2010 PETROLIAM NASIONAL BERHAD (PETRONAS)
Who are you ?
So which profile reflect
you ….
Answer
Open
Please answer the questionnaire provided in the manual.
Open
© 2010 PETROLIAM NASIONAL BERHAD (PETRONAS)
Not
32Open
PRE – Build Negotiation Team
Negotiation Members & Team – Everyone has important role to play……
Team Leader
Technical Expert
Commercial Expert
Other functional team e.g. Legal, Finance, Tax. PEC,
Strategic Planning, Risks, M&A etc.
© 2010 PETROLIAM NASIONAL BERHAD (PETRONAS) 33Open
PRE – Negotiation Team
Negotiation Roles in a Team
Team Leader
Critic
(Bad Cops)Observer
(Watch the temperature
of TOS)
Builder
(Deal creator / consolidator)
Recorder
(Scriber)
Expert
(Provide evidence)
Relater
(Relationship & Mediator)
There are many roles to be played in negotiations especially high-value stakes , international politic etc.
© 2010 PETROLIAM NASIONAL BERHAD (PETRONAS) 34Open
Team Leader (TL) - Coordinate of the team - The main ‘face’ of negotiation team- Senior person who has authority to make decision
Critic - “Bad Cop” of the team- Internal team (in private) & the other side (TOS) focus
Relator - “Good Cop” of the team- Relationship & may act as mediator
Expert - Provide evidence- Part time only
Recorder - Scriber of the team- Confirmation of the exact deal agreed
Builder - Putting a package deal in exchange with TOS- Seeks the truth and act s sounding board to Leader
Observer - Attention to subtleties of words & non-verbal body language
- Temperature of the TOS & internal
Neg
oti
atio
n R
ole
sPRE – Negotiation Team
© 2010 PETROLIAM NASIONAL BERHAD (PETRONAS)
“ In a successful negotiation everybody wins”
35Open
NE
GO
TIA
TIO
N M
OD
UL
E
Negotiation-Commercial
2. DURING
• NEGOTIATION STRATEGY & PLAN
– POSITION VS INTEREST
• WHAT IS YOUR ‘BATNA’ ?
• NEGOTIATION TEAM ROLES
© 2010 PETROLIAM NASIONAL BERHAD (PETRONAS)
DURING …..
POSITION
1.WHAT?
2.WIN/LOSE,LOSE/WIN,
LOSE/LOSE
3. SCARCITY MINDSET
4.DEFENSIVE- GET PERSONAL
5.COMPROMISE
Open
INTEREST
1.WHY?
2.WIN/WIN
3. ABUNDANCE MINDSET
4.OPEN - SOLUTION FOCUS
5.RESOLUTION
VS
© 2010 PETROLIAM NASIONAL BERHAD (PETRONAS)
NEGOTIATION METHODS
Open 39
DURING ….
PEOPLE vs PROBLEM
INTEREST VS POSITION
OPTIONS
CRITERIA- OBJECTIVE
© 2010 PETROLIAM NASIONAL BERHAD (PETRONAS)
NEGOTIATION METHODS
Open 40
DURING …..
CRITERIA- OBJECTIVE
1.QUANTITATIVE
STANDARD
2.QUALITATIVE
(INTEREST)
PROCEDURE
© 2010 PETROLIAM NASIONAL BERHAD (PETRONAS)
Power and Need move opposite directions. Power and tend to play power game.What can you do?
Develop BATNA.—point at which you walk away.Song—“The Gambler”. Before going in already set BATNA.
Open 41
DURING……
POWER
NEED
BATNA
B
A
T
N
A
EST
LTERNATIVE
O
EGOTIATED
GREEMENT
Power and Need move opposite directions
IF YOU DON’T WANT TO PLAY
Develop BATNA - point at which you
walk away.Higher Power
Play power game & a ‘bully’Can you afford to
walk away?Higher need less power. Case: In properties market -
look for motivated sellers
© 2010 PETROLIAM NASIONAL BERHAD (PETRONAS)
Power and Need move opposite directions. Power and tend to play power game.What can you do?
Develop BATNA.—point at which you walk away.Song—“The Gambler”. Before going in already set BATNA.
Open 44
DURING……
POWER
NEED
BATNA
B
A
T
N
A
EST
LTERNATIVE
O
EGOTIATED
GREEMENT
IF YOU DON’T WANT TO PLAY
Power and Need move opposite directions.
• Higher need less power. Case: In properties market - look for motivated sellers
e.g. upgrading house and need cash, divorce etc.
• Higher the Power - tend to play power game & a ‘bully’
What can you do?
Develop BATNA — point at which you walk away.
e.g . Hijackers—they know your BATNA is to storm them. In their interest they will not to cross the line.
Can you afford to walk away?
Case: IOC – ranges of investment portfolio namely other deal await, soft dollar - provide training, technology transfers, assets trade off
© 2010 PETROLIAM NASIONAL BERHAD (PETRONAS) 45Open
DURING ….
• Open discussion on neutral subject
• When holding back, assure The Other Side (TOS) that efforts are
made to reach a mutually agreeable turn-out.
• Respect The Other Side’s experience and expertise
• Frame the task positively, “ as a joint effort “
• Emphasize your openness to The Other Side’s interests and
concerns.
• Present clear explanation for any complex issues
Bridges of Rapport…
© 2010 PETROLIAM NASIONAL BERHAD (PETRONAS)
A
46Open
1. Aim for the best deal
In summary……
Negotiation Team
2. Get the other person’s ‘shopping list’
3. Keep the whole package in mind.
4. Keep Searching for Variables
Always maintain good relationship with TOS……
© 2010 PETROLIAM NASIONAL BERHAD (PETRONAS)
Negotiation-Commercial
Some of the Guiding Principles …..
Open
48Open
© 2010 PETROLIAM NASIONAL BERHAD (PETRONAS)
55%38%
7%
Visual body language( gestures, postures, facial expressions)
Non Verbal /Vocal( tone, pitch, pace)
Words ( content)
Body language speaks louder than words
Open
Research revealed 3 elements…
DURING …..
© 2010 PETROLIAM NASIONAL BERHAD (PETRONAS)
‘Body language’ is core for Ice Breaking and rapport building
“SOFTEN”
S :
O :
F :
T :
E :
N :
Immediate signal that your purpose is not to do harm
body posture make you appear relax and accepting others
Proximity sends a message of liking and responsiveness
Appropriate pat indicate empathy and can bolster negotiations
Reflect that you are trustworthy, believable and responsive.
Shows you are listening , processing and encouraging the deal conversations.
Source: Successful Negotiation by Ginny Pearson Barnes, Ed.D.
Smile
Open
Forward lean
Touch
Eye Contact
Nod
Open
51Source : Slideshare Mohamed Mahmoud , Teaching Assistant at Egyptian E-learning UniversityOpen
© 2010 PETROLIAM NASIONAL BERHAD (PETRONAS)
4 Tips for reading body language in a negotiation
Dr Carol Kinsey Goman, Author of the silent language of leaders i.e. How body language can help or hurt how you lead.
Open
DURING …….
© 2010 PETROLIAM NASIONAL BERHAD (PETRONAS)
4 Tips for reading body language in a negotiation
Key Observations/Discussion:
1. Pay Attention
2. Identify A Baseline
3. Consider the Context
4. Evaluate Gestural Clusters
Open
DURING ………
© 2010 PETROLIAM NASIONAL BERHAD (PETRONAS) Open
Non Verbal Negotiation Gestures
Nervousness ThinkingAcceptance
Suspicion
Alertness Expectancy
Frustration
Frustration Boredom
Suspicion
Confidence
Thinking
Suspicion
© 2010 PETROLIAM NASIONAL BERHAD (PETRONAS) Open
ObservableSigns
Dominance and Power• Placing feet on desk• Making piercing eye contact• Putting hands behind head or neck• Placing hands on hips• Giving a palm-down handshake• Standing while the other side is seated• Stippling (fingertips touching)
Non Verbal Negotiation Gestures
Submission and Nervousness• Fidgeting• Making minimum eye contact• Touching hands to face, hair, etc• Using briefcase to “guard” body• Giving a palm-up handshake• Clearing throat
DURING ……
© 2010 PETROLIAM NASIONAL BERHAD (PETRONAS) Open
DURING …….
Body Language – Do’s & Don’ts/Good Manners
© 2010 PETROLIAM NASIONAL BERHAD (PETRONAS) Open
DURING ……
Body Language – Do’s & Don’ts/Good Manners
Key Observations/Discussion:
1. Position Of Shoulders
2. Hands/Fingers Actions
3. Standing Still/Stationary
4. Feet Position.
© 2010 PETROLIAM NASIONAL BERHAD (PETRONAS) Open 59
DURING …
Typical Agreements - Negotiations in the Upstream Business
are:
• Production Sharing Contract (PSC/EPSA)
• Joint Operation Agreement (JOA)
• Gas Sales Agreement (GSA)
• Common Facilities Sharing Agreement (FSA)
• Pipeline and Transportation Agreement (COPA/COTA)
© 2010 PETROLIAM NASIONAL BERHAD (PETRONAS) Open 60
PSC /EPSA – Blocks Acquisition
1. Direct negotiation with NOC
2. Participate in the Open Bidding
3. Acquire the company (target co.) having the block
(M&A)
DURING ….
Organic Growth
Inorganic Growth
© 2010 PETROLIAM NASIONAL BERHAD (PETRONAS) Open 61
DURING …….
Example: Areas open for negotiation in the PSC
PSC Fiscal Terms – Subject to law of the country
• Cost Oil and Profit Oil rate between Contractors
& Government
• Petroleum Income Tax rate and payment
• Minimum PSC Commitment & penalty
• Abandonment & Decommissioning arrangement
© 2010 PETROLIAM NASIONAL BERHAD (PETRONAS)
Open
62
DURING …….
Typical PSC Split (Host Government and PS Contractor)
Total Production (TP): 100 Barrels
Cost Oil (CO) : 60% (TP) = 60 Barrels
Royalty (R) : 10% (TP) = 10 Barrels
Profit Oil (PO) : TP - R – CO =30bbl
Petroleum Income Tax: ??% X (Profit)
[Profit = Revenue – Tax deductible exp.]
e.g.40% x 69 bbl. = 27.6 bbl.
Contractor PO:
30% = 9 Bbls.
Government PO:
70% = 21Bbls.
Gov.- 10+21+27.6 Cont.- 60+9-27.6
CO Increase ?? - Cost oil tranche- Cost Mark up- Reduce Capex
amortization period
Contractor PO Increase ? - Higher %
Contractor Taxation ? - Government waive
- Ministry oil pay- Reduce rate
- Tax holidays or credit
© 2010 PETROLIAM NASIONAL BERHAD (PETRONAS) Open 63
DURING ……
Example:- Negotiation in the M&A
• The equity stake of acquired company
• Purchase consideration
• Condition Precedent (CPs) e.g. subject to Board approval,
stock exchange, government approval etc.
• Long Stop Date i.e. completion of the transaction
© 2010 PETROLIAM NASIONAL BERHAD (PETRONAS) Open 64
DURING ……
Purchase consideration
• Purchase consideration i.e. purchase price.
i. Quantitative (numerical) e.g. NTA, DCF, PE, Mark to
market etc. )
ii. Qualitative (non numerical) e.g. Operating
environment (Africa vs Europe) :- SLEPT
SOCIAL, LEGAL, ECONOMIC, POLITICAL, TECHNOLOGICAL)
© 2010 PETROLIAM NASIONAL BERHAD (PETRONAS)
30%
Open 65
DURING ……
Example: JOA agreement
• Agreement on sharing of cost, liabilities and revenue allocation as
per agreed participating interest (PI) e.g. PETRONAS :40%, CNPC
30%, ONGC 30%
• Decision making and voting rights: Eg Unanimous, passing mark of
65% or any 2 partners
• Work Program & Budget, Cash call payment and Default process eg
Forfeiture PI and Parent Company Guarantee (especially during
Abandonment & Decommissioning)
© 2010 PETROLIAM NASIONAL BERHAD (PETRONAS) Open 66
DURING ……..
GSA : Key Commercial Terms
Contract Quantity
Daily Contract Quantity
Maximum Daily Contract Quantity
Annual Contract Quantity
Shortfall gas
Excessgas
Undertake gas
Take or Pay Quantity
Carry Forward
Make Up
© 2010 PETROLIAM NASIONAL BERHAD (PETRONAS)
• Gas Price
0.3 Ln,
where Ln = the weighted average price of LNG sold to LNG CustomersOpen 67
DURING ……..
Gas Sales Agreement - Sales Terms
• Natural Gas can be sold through:
I. Joint Dedicated Sales (JDS)
II. Aggregator basis
PS Contractors PETRONAS End Customer
PETRONAS
& PS
Contractors End
Customer
UGSA GSA
GSA
© 2010 PETROLIAM NASIONAL BERHAD (PETRONAS) Open 68
DURING …….
Pipeline and Transportation agreement
• Pipeline project scope
• Pipeline ownership/equity
• CAPEX Funding arrangement (e.g. carry)
• Recovery of total investment and profit margin
• Tariff Rate of Pipeline Users
• Priority of usage
• Transfer Ownership
© 2010 PETROLIAM NASIONAL BERHAD (PETRONAS)
Tariff is referred to as Transportation Cost Allowance (TCA)
TCA = Operating Cost Allowance (OCA) + Capital Cost Allowance (CCA)= Variable Fee + Fixed Fee
OCA is based on annual Operating Costs
CCA is calculated using the equation:CCA = (Rate Base + CCA b/f) X RORB + Depreciation + CCA b/f
Whereby:Rate Base = Mid-Year Residual Capex + Working Capital
Residual Capex = Year End Capex – Cumulative DepreciationYear End Capex = Cumulative Capex at the start of the year + New CapexAddition
Working Capital = 2 months Operating Cost (1/6 of Operating Cost)RORB = return on rate base
Block 1/2/4 Base User = 15%Block 1/2/4 Excess User = 18%Block 3&7 User = 12%
Open 69
DURING …….
Example Pipeline and Transportation investment recovery
Tariff is referred to as Transportation Cost Allowance (TCA)
TCA = Operating Cost Allowance (OCA) + Capital Cost Allowance (CCA)
= Variable Fee + Fixed Fee
OCA is based on annual Operating Costs
CCA is calculated using the equation:
CCA = (Rate Base + CCA b/f) X RORB + Depreciation + CCA b/f
© 2010 PETROLIAM NASIONAL BERHAD (PETRONAS)
Tariff is referred to as Transportation Cost Allowance (TCA)
TCA = Operating Cost Allowance (OCA) + Capital Cost Allowance (CCA)= Variable Fee + Fixed Fee
OCA is based on annual Operating Costs
CCA is calculated using the equation:CCA = (Rate Base + CCA b/f) X RORB + Depreciation + CCA b/f
Whereby:Rate Base = Mid-Year Residual Capex + Working Capital
Residual Capex = Year End Capex – Cumulative DepreciationYear End Capex = Cumulative Capex at the start of the year + New CapexAddition
Working Capital = 2 months Operating Cost (1/6 of Operating Cost)RORB = return on rate base
Block 1/2/4 Base User = 15%Block 1/2/4 Excess User = 18%Block 3&7 User = 12%
Open 70
DURING …….
Example Pipeline and Transportation investment recovery
Whereby:
Rate Base = Mid-Year Residual Capex + Working Capital
Residual Capex = Year End Capex – Cumulative Depreciation
Year End Capex = Cumulative Capex at the start of the year
+ New Capex Addition
Working Capital = 2 months Operating Cost (1/6 of Operating Cost)
RORB = return on rate base
Block 1/2/4 Base User = 15%
Block 1/2/4 Excess User = 18%
Block 3&7 User = 12%
© 2010 PETROLIAM NASIONAL BERHAD (PETRONAS)
“ In a successful negotiation everybody wins”
71Open
NE
GO
TIA
TIO
N M
OD
UL
E
Negotiation-Commercial
3. POST
• CLOSE
• AGREEMENT
• RELATIONSHIP
• HANDING OVER TO
EXECUTION TEAM
© 2010 PETROLIAM NASIONAL BERHAD (PETRONAS) 72Open
POST PHASE - CLOSE
Close
• Move to closure
• Agree the details
• Confirm the agreement (sign on the dotted line)
• Follow Ups
• Celebration
• Maintain good relationship
• Hand-over to execution team (e.g. Asset Team)
© 2010 PETROLIAM NASIONAL BERHAD (PETRONAS) 73Open
POST PHASE - CLOSE
Close
• Move to closure- Signal readiness to close- Move steadily and surely to close (X rush to close)
• Agree the details- Summarise the exchange- Handle final objection and doubts- Handle last minutes tricks- May refer to highest authority in the organization (if any last
minute U-turn)
• Confirm the agreement (sign on the dotted line)- Shanking hands- Written and legally binding agreement- Signing the contract/agreement (document)
© 2010 PETROLIAM NASIONAL BERHAD (PETRONAS) 74Open
POST PHASE - CLOSE
• Follow up
- Signing ceremony- Registration of agreement (if any)- Announcement and communication (media)
• Celebration
• Maintain good relationship
• Hand over to execution team
- Highlight the overall deal and the signed agreement- Share the insights and context of the deal
© 2010 PETROLIAM NASIONAL BERHAD (PETRONAS) Open
1
2
3
4
Proposal – Affirm the final deal
Introduction- People, Deal, Location
Explore – Test & stretch
Negotiation Process/Stages
Close deal – Agreement, Win-Win
© 2010 PETROLIAM NASIONAL BERHAD (PETRONAS) 76Open
SHARING
Personal journey and experience sharing by ;
• Pn Rosita Abu Bakar
• Pn Faziah Talib
THANK YOU
77
Open
© 2010 PETROLIAM NASIONAL BERHAD (PETRONAS) Open 78
Negotiation-Commercial
ApplicationClassroom Activity
“CASE STUDY” – NEGOTIATION
GOOD LUCK !
© 2010 PETROLIAM NASIONAL BERHAD (PETRONAS) Open 79
Negotiation-Commercial
Andalusia Oil Pty won a bidding offshore block of E45 in waters of
Vietnam. Upon the award of the block, Andalusia management realized
that the production block straddles to the water boundary of Vietnam’s
neighboring country, Laos.
Laos is one of the world oil producer country and Halinger International
Co has been the main operator for all its onshore & offshore E&P
activities since early 1980s.
The E45 Block estimated proven reserves was 50mil bbls and its daily
average production was expected at 150k bbls/day.
Every year, the Joint Steering Committee (JSC) will meet to discuss on
its exploration and operation activities . The JSC will meet alternatively
at Vietnam or Laos
Role Play
© 2010 PETROLIAM NASIONAL BERHAD (PETRONAS) Open 80
Negotiation-Commercial
Shelly is a junior business executive at Andalusia Oil Pty and her job is
to manage the WP & Budget for Vietnam offshore Block 45. Shelly has
been working for 2 years in the company. She is being assigned to lead
the negotiation team with Halinger International Co of Laos.
The followings are information that Shelly discovered :-
i. Halinger Int Co negotiation team are highly experienced
technical specialist
ii. Shelly’s negotiation team members comprised 1 technical staff and
1 finance staff. All of them have less than 5 years experience.
iii. The JSC Chairmen were unhappy with the progress of the meeting.
3 years had lapsed and there were no successful effort made by the
joint technical operators to officially opened up Block 45.
Role Play…continue
© 2010 PETROLIAM NASIONAL BERHAD (PETRONAS) Open 81
Negotiation-Commercial
The followings are the challenges that Shelly and her team need to resolve
in order to successfully negotiate for the opening of Block E4 before the
next JSC meeting which is to be held at Vietnam.
i. Her team are given 3 months to finalize the negotiation before the
official signing of the opening block agreement .
ii. Both Chairman of the JSC are expected to attend the ceremony.
iii. Halinger Int Co negotiation team are not in a hurry with the joint
operating activities as their main focus is on its onshore production
activities. Block E45 is an offshore exploration activities and it
constitutes only 10 % of Halinger Int Co total annual production
volume.
iv. All Halinger Int Co Senior Technical personnel has had an experienced
of more than 10 years in oil and gas industry worldwide.
v. Halinger Int Co meetings are usually held at top ranking hotels and
they are given VIP treatment.
vi. Apparently Vietnam has only one top ranking hotel and is situated 500
km away from Andalusia Head Office.
Role Play…continue
© 2010 PETROLIAM NASIONAL BERHAD (PETRONAS) Open 82
Negotiation-Commercial
A group of 3 members will be :-
a) Assigned either as Andalusia staff for Vietnam or Halinger operator for Laos
b) Each individual will be expected to behave as per what is written on the play cards .
c) The negotiation team plan schedules are:-
i. 5 minutes - pre negotiation strategy ( 4 essential rules of negotiation)
ii. 10 minutes - Negotiation process ( persuasive communication & EEPC )
iii. 15 minutes – post negotiation ( group discussion & feedback)
Role Play…continue
© 2010 PETROLIAM NASIONAL BERHAD (PETRONAS) Open 83
Negotiation-Commercial
Important Interests Basic or Underlying InterestsAsk yourself “Why “ and “ for what purpose?”
RelativeImportance( 100 Points)
Own Interest
Musts Ideals Loss leaders
The Other Side Wants
o Their Prioritieso Their Wantso Their Barriers
In the left hand column , list the more interests for you and The Other Side counterpart that you are able to identify. Ask yourself “ why “ & “ for what purpose?” Any deeper interest list in the 2nd column. Finally , rate your own interests by allocating 100 points
Interest: Probe for Underlying Interests
© 2010 PETROLIAM NASIONAL BERHAD (PETRONAS) Open 84
Negotiation-Commercial
Alternative 1: Create Options to meet Interests
Your Interests Possible Options Their Interests
Look at your interests and list all possible ways to meet the interests on both sides.List interests in order of their relative importance.
© 2010 PETROLIAM NASIONAL BERHAD (PETRONAS) Open 85
Negotiation-Commercial
Possible Alternatives Pros Cons
What could you do to satisfy your interests if you could not reach an agreement
My key interests:-
Alternative 2:Think of my Alternatives to the Negotiated Agreements
© 2010 PETROLIAM NASIONAL BERHAD (PETRONAS)
Open 86
Knowledge Skill
Attitude
• Listening• Effective Communication• Problem Solving • Rapport building
• Commercial Savvy• Influence Technique• Conflict Management• People Management
• Professional and credible• Assertive and decisive• Self discipline and creative• Patient and careful listener• Open minded • Self Discipline• Flexible • Highly ethical
Traits of a Good Negotiator
REFLECTIONS…..
© 2010 PETROLIAM NASIONAL BERHAD (PETRONAS) 87Open
BACK UPS
Negotiation-Commercial