IMPACTS OF GEOPOLITICS ON OIL & GAS DEVELOPMENT--WHAT LAWYERS NEED TO KNOW

• Jurisdiction: Derecho Internacional

International Mining and Oil & Gas Law, Development, and Investment (Apr 2019)
CHAPTER 11A
IMPACTS OF GEOPOLITICS ON OIL & GAS DEVELOPMENT--WHAT LAWYERS NEED TO KNOW
Martín Añez Rea
Repsol
Madrid

[Page 11A-1]

MARTÍN AÑEZ REA is Director of Exploration and Production Legal Services at REPSOL S.A., currently responsible for Latin America. He has more than 20 years of experience in the oil and gas business and particularly in Upstream legal issues. He has been a lawyer in other energy companies such as OXY and Maxus. He received his law degree from the Private University of Santa Cruz de la Sierra (Bolivia), and a Master in Economic Law from the University of Chile (Santiago de Chile) and ESADE Alumni, Diploma in Business Management (Madrid, Spain). Member of the Association of International Petroleum Negotiators (AIPN). Lecturer of Contracting and International Law of Hydrocarbons issues in Spanish and Latin American universities.

Contractual adaptation and stability, comparative analysis in some Latin American countries.

The search for hydrocarbons is a haphazard and very high risk activity, since significant amounts of money are invested and specialized human and technological resources are allocated, with the - often unsuccessful - purpose of making a commercial discovery.

The odds of finding a discovery and its potential appreciation as "commercial" differ in the time and space, considering that it would be most likely, and therefore less burdensome to find it in mature areas. Also, in higher-prices periods, heavy crudes may be considered commercial, and LNG obtained from gas appears as a commodity.

On the other hand, natural gas as such requires three basic elements to be qualified as commercial, namely: quantity / quality, transport and market; but not necessarily in that order.

Thus, the legal principle that contracts are "law between parties" is universally respected, which is why it is fundamental to negotiate between the private investor and the State represented by an agency that administers the country's mining domain (ANP, ANH, CNH) or by a national company that has at the same time the role of operator and the owner of mining domain (Ecopetrol, YPFB).

When negotiating an oil contract, the international nature of this activity must be considered, since the narrow links that we study in Private International Law are very present both on the subjective and objective level.

Of the legal system of a country it is advisable to know mainly: (i) the level of constitutional coverage; (ii) international treaties of reciprocal protection and double taxation; (iii) specific hydrocarbon laws and foreign investment; (iv) special regulations, particularly in environmental and social matters; and, (v) exchange and tax regulations.

[Page 11A-2]

It is also important to know how legal regulations are applied; that is to say, the respect that is had to them in the reality and the existing confidence in the judicial and governmental system.

Given the medium and long term contracting period that characterizes these projects (They usually last between 10 and 40 years), in many cases, the legal security of the country where the activities are to be carried out depends on the current political situation and the one foreseen in the future, so a recurring question before undertaking any project is, when are the next elections?

In this sense, why an analysis of the stability and contractual adaptation between private investors...