Stabilisation and Renegotiation Clauses in Iraqi Kurdistan Oil and Gas Contracts: A Comparative Study

Abstract

Oil and gas contracts with the long-term characteristic are the scene of colliding between international oil companies’ interests and host government’s interests. This characteristic could make such contracts vulnerable to unpredictable political, economic and legislative changes at the time of conclusion. Therefore, the contracting parties tend to use mechanisms to protect the economic balance they have reached from the conclusion until completing the contract. Contractual clauses are an effective mechanism to maintain the economic balance, various contractual clauses have been devised, of which stabilisation and renegotiation clauses are prominent types. This article aims to examine and evaluate the stabilisation and renegotiation clauses in the Iraqi Kurdistan Region oil and gas contracts. It elaborates on the concept and consequences of these clauses and provides a comparison of the clauses in the different countries’ oil and gas contracts. The research methods adopted in this article, include comparative analysis methods and the research is conducted through extensive study of the relevant literature. The principal finding from this study is the existence of deficiencies and shortcomings in stabilisation and renegotiation clauses within the Iraqi Kurdistan production sharing contracts. It is suggested that the Kurdistan Regional Government should review such clauses for its future oil and gas contracts. Keywords : Stabilisation Clause, Renegotiation Clause, Kurdistan Region of Iraq, Production Sharing Contracts, Indonesia and Nigeria. DOI: 10.7176/JLPG/100-10 Publication date: August 31 st 2020