Lugar de Noticias Haynes and Boone
De-Risking International Energy Deals
Sashe D. Dimitroff
The potential for renewed international oil and gas deal activity is apparent as signs of economic recovery emerge in developed economies. But, as with companies in other industrial sectors, energy firms must approach business negotiations cautiously and place renewed emphasis on reducing risk.
While the importance of drafting contractual documents carefully is not new, an important element of assessing how international energy deals can be de-risked is to reconsider standard contractual clauses. Many energy companies with successful operating records in western Europe or North America are moving into countries where the political and legal systems are unfamiliar and, at times, treacherous. Further, investors now require greater assurance that all risk factors are accounted for. It is vital that contracts are improved to address these risks.
Excerpted from Petroleum Economist, November, 2010. To read the full article, click on the PDF linked below.