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.
International Investment Law between Commitment and Flexibility: A Contract Theory Analysis
This article analyzes international investment protection law by using tools of economic contract theory. Contract theory has been applied to international trade law, but investment law has not yet been analyzed under this methodology. International Investment Agreements may be interpreted as a mechanism for overcoming commitment problems between investor and host state in order to generate mutual benefits. States trade credibility for sovereignty as international investment law restricts the regulatory conduct of states to an unusual extent, subject to control through compulsory international adjudication. A well-known problem in contract theory is how to deal with uncertainty. Changing conditions are a prevalent characteristic in investment law. Contract theory finds that too strict and inflexible contracts may impair the joint surplus of the contracting parties. Thus, a trade-off arises between ex ante commitment on the one hand and flexibility ex post in order to uphold the efficiency of the contract on the other. Those problems become virulent in unforeseen crises, such as financial or economic ones. This article analyzes commitment and flexibility mechanisms in international investment protection law and proposes to use similar mechanisms as in WTO law to design more optimal contracts. Oxford University Press 2009, all rights reserved, Oxford University Press.
Colleagues as Change Agents: How Department Networks and Opinion Leaders Influence Teaching at a Single Research University
This study investigates colleague–colleague relationships within life sciences departments and how they may promote teaching reform. The authors found that discipline-based education researchers are perceived as promoting changes among colleagues in views about teaching and teaching practices. Other faculty may also be leveraged to support change.