Newsletter - What's happening in Bargate ?- May 2018
Bargate Managing Director speaks at AIPN Summit
Our managing director, Dr Ekpen Omonbude (Twitter: @ekpenzo) was a panel guest at this year’s Association of International Petroleum Negotiators International Petroleum Summit (AIPN’s IPS). It was held in London from 23 – 25 April.
It’s always fun when a non-lawyer crashes a lawyers’ fiesta. Ekpen was asked to speak about his experience in dealing with governments on matters concerning petroleum law, regulation and negotiating contracts. So, in typical Bargate fashion, he said five things.
#1. Local content policy is becoming a bigger deal for host governments, and we’re starting to see more of the disconnect between what some laws require and the operability of existing contracts.
#2. Transfer of rights provisions are being tested a bit more and there’s also a gap between what typical contracts say would be done and what the tax authority thinks should be done.
#3. State participation mechanisms can be tweaked for domestic players to deepen their experience. This can be a powerful local content strategy, even though it has the risk of being dominated by the minister’s friend or relative.
#4. There is scope for better interface between lead negotiators of IOCs and government stakeholders, because there’s definitely a trust deficit. Emphasis should be on understanding and explaining the transaction and activities along the lifecycle before any negotiation starts.
#5. We have an information asymmetry problem that is widening in some cases, such as in the implementation of commercial terms of the contract vis-à-vis what the tax laws require.
The rest of the Summit was pretty cool, albeit given a backdrop of significant cuts in drilling activity over the last 4-5 years.
Given the trajectory of oil demand growth (even in the most optimistic structural change scenarios where we go greener a lot faster), we’re going to have to start drilling a bit more or else oil prices will likely tell us how silly we’ve been by not making sufficient supply available.