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Presentation to the EITI Board Abidjan, October 16th, 2013Johnny West, OpenOil
How extractives contracts interact with governance
1)Contracts live in a complex natural habitat2)Negotiation is permanent3)There is a lot NOT in the contracts4)Contracts are a tangled web
Four rules of thumb about extractives contracts
National legal framework Regulations Extractives sector laws Constitution General laws (eg labour, environment, human rights)
International legal framework Conventions Investment Treaties
1) Contracts in their natural habitat
Let's talk about that later Future gas finds Future oil finds Accounting Procedures
Placeholder language “generally accepted international practices” “prudent” “diligent” “use reasonable efforts”
2) The contract as framework for permanent negotiation
Predictable financial results Fiscal regimes are formulae, not hard numbers Future: price is unknown Past & Present: capital and operating costs unknown
Technical and Geological Data How much resource What techniques are used to get it.
3) What extractives agreements don't include...
Paperchase: how long does an agreement last? (Iraq)
Article 3: Term of Contract Article 1: Definitions Article 39: Signature, Ratification and Effective Date But btw, please read the whole contract...
4) The contract as complex web
1)Contracts live in a complex natural habitat2)Negotiation is permanent3)There is a lot NOT in the contracts4)Contracts are a tangled web
Four rules of thumb about extractives contracts
Four countries: finance minister not seen the contracts A missed phone call scotches a bid round Joined-up government would include ministries of
finance, economy, environment, justice, labour, auditor-general, local.
Negotiation and monitoring stages. Government brief is inherently more complex
The challenge of contracts in the governance space
Government learning curve is accelerating Contracts are becoming more standardised Flexible (sliding scale) terms becoming more common
But the picture is changing... slowly...