Stabilisation and Renegotiation Clauses in Production Sharing Contracts: Examining the Problems and Key Issues
OPEC's Monthly Oil Market Report (May, 2011) depicts that the price of OPEC's Reference Basket increased in April, 2011 by about $8.25 compared to March, 2011 and by $35.76 from a year earlier. The Nymex WTI and ICE Brent contracts also witnessed their highest prices since the global financial crisis of 2008. Oil producers like Nigeria are not just on the verge of a national petroleum industry 'legal revolution' in its quest to ensure maximum benefits accrue from oil and gas resource exploitation, but as overtime found itself in politically and economically unacceptable position as parties to Exploration and Production arrangements with investing Oil Companies.Russia, Venezuela, Bolivia etc. have also been earmarked as producers that consistently engage in petroleum contract reviews and nationalisation to ensure petroleum arrangements yield maximum benefits for the State. Following this background and coupled with the unique attributes of Production Sharing Contracts as a preferred option for arranging upstream petroleum operations, this paper essentially seeks to examine the assertion that- there is no absolute 'contractual security' for contracting parties. By highlighting relevant problems and issues, especially in countries like Nigeria, it points out that contractual instruments like stabilization, renegotiation and adaptation clauses can at best guide and not freeze-up relationship and cooperation inter vivos, towards contractual efficiency. This paper examines the use and legal implications of stabilisation and renegotiation clauses in production sharing contracts (PSCs) in the petroleum industry, especially as a means of guaranteeing contractual security. It identifies relevant issues and comments on problems arising from the use of these clauses in guiding the relationships of parties, especially as contractual instruments for risk management.
Elementos de Direito do Investimento Estrangeiro e as Cláusulas de Estabilização (Elements of International Investment Law and the Stabilisation Clauses)
Portuguese Abstract: A crescente globalizacao da economia mundial e o avanco das tecnologias de comunicacao nao param de criar desdobramentos sobre os mais variados ramos do direito e desafiar os seus estudiosos. Um traco marcante deste movimento esta na intensificacao de investimentos overseas. Os particulares, valendo-se da possibilidade de migrar seus capitais com grande facilidade, sao atraidos por politicas de promocao de investimento adotadas por paises em desenvolvimento ou pouco desenvolvidos, que buscam, com a chegada desses novos recursos, desenvolver as economias nacionais. Os investidores de paises ricos, de seu lado, vem nessas “novas” economias oportunidades de alavancar seus negocios e incrementar seus lucros, seja atraves do acesso a novos - e muitas vezes populosos - mercados consumidores, em que ha pouca ou nenhuma concorrencia, seja por intermedio da extracao de recursos naturais inexistentes em seus paises de origem, e que sao pouco ou nada explorados pelos Estados que detem essas riquezas. Evidentemente, esse movimento nao passou – e nao passa – despercebido ao direito. O objetivo do presente estudo e, precisamente, apresentar de forma didatica, programatica e sintetizada o papel do direito na regulamentacao dessas relacoes internacionais. Para tanto, iniciaremos a exposicao a partir da apresentacao do direito do investimento estrangeiro e de seus principais elementos (instrumentos juridicos e standard de tratamento), para depois passarmos a uma analise mais detida das stabilzsation clauses, que mais bem representam a busca pela estabilizacao da relacao contratual estabelecida entre investidor e Estado hospedeiro. English Abstract: The growing economic globalization and technological advance in communications are creating new developments in nearly all areas of law and are posing challenges to scholars. A standout feature of this movement is the intensification of cross-border investments and the ease of moving capital. Developing countries, looking to spur economic development from outside investments, create policies to attract foreign capital. In turn, investors from rich countries see these “new” economies as opportunities to leverage their businesses and increase their profits, either through access to new – and often populous – consumer markets with little or no competition, or through extraction of natural resources that are scarce in the country of origin. Evidently this movement has not been ignored by the law. The objective of this article is to present and summarize the role of the law in regulating these international relations. For this purpose, we start by examining the law on foreign investments and its principal elements (legal instruments and treatment standards), and then specifically take a closer look at stabilisation clauses, which reflect the effort to stabilize the contractual relationship established between the investor and host country.
Evidence of spurious results along with spatially autocorrelated errors in the context of geographically weighted regression for two independent SAR(1) processes
AbstractThe aim of this paper is to examine the performance of the geographically weighted regression (GWR) technique in terms of recognizing linear relationships at the local level. Using a Monte Carlo analysis with two independent spatially autocorrelated SAR(1) processes, this study finds that spurious behavior exists at the local level along with spatially autocorrelated errors. Therefore, GWR estimation results must be interpreted with caution.
