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.
The Pursuit of Stability in International Energy Investment Contracts: A Critical Appraisal of the Emerging Trends
The purpose of this paper is to examine the emerging trends of stabilization in view of the current state of international law in the ﬁeld. The theme of the paper is approachedfrom three broad perspectives. First, a brief review of the classic stabilization techniqueswill be offered, followed by an appraisal of the modern ones (which are yet to attract seri-ous scholarly attention and arbitral scrutiny) in international energy contracts with spe-cial reference to the emerging innovative pursuit of stability in the cross-border pipelineindustry. Although the focus of the present paper is on the energy industry, the discussionwill also be relevant to the broader area of international investment. Second, thefunctional value of stabilization techniques will be examined in light of the arbitral jurisprudence and juristic views. Third, the emerging conceptual perimeter of the norma-tive standards of treaty stabilization of foreign investors’ contractual rights will be criti-cally explored. And, ﬁnally some concluding remarks will be made.
Source book
Macromolecular Crystallography with Synchrotron Radiation.By John R. Helliwell. Cambridge University Press: 1992. Pp. 595. £95, $165.