Joint Venture Arrangements Research Articles

Responsibility to Respect: Why the Core Company Should Act When Affiliates Infringe Human Rights

This chapter discusses the treatment that Professor Ruggie’s Guiding Principles offer for the responsibility to respect human rights (RtR) as applied to core companies whose affiliates’ operations infringe human rights. The issue is about a core company’s responsibility to act to address abuses that occur towards the periphery of its group or network. The fairness of globalisation is often questioned with examples from industries where business enterprises are structured along buyer-supplier, parent-subsidiary and joint venture arrangements. The concern here is that the RtR raises difficult issues when applied to a business group or network as opposed to a single business entity. The Guiding Principles are critically reviewed in section 2 for how they deal with the issue of a core company’s responsibility to act. Section 3 seeks inspiration in tort jurisprudence in an attempt to justify a responsibility to act and thus reinforce Ruggie’s foundational work on the RtR. Section 4 identifies some outstanding issues related to the RtR that could benefit from further research and attention in the post-Ruggie period.

Small business performance: business, strategy and owner‐manager characteristics

PurposeThis paper aims to contribute to the understanding of the factors that influence small to medium‐sized enterprise (SME) performance and particularly, growth.Design/methodology/approachThis paper utilises an original data set of 360 SMEs employing 5‐249 people to run logit regression models of employment growth, turnover growth and profitability. The models include characteristics of the businesses, the owner‐managers and their strategies.FindingsThe results suggest that size and age of enterprise dominate performance and are more important than strategy and the entrepreneurial characteristics of the owner. Having a business plan was also found to be important.Research limitations/implicationsThe results contribute to the development of theoretical and knowledge bases, as well as offering results that will be of interest to research and policy communities. The results are limited to a single survey, using cross‐sectional data.Practical implicationsThe findings have a bearing on business growth strategy for policy makers. The results suggest that policy measures that promote the take‐up of business plans and are targeted at younger, larger‐sized businesses may have the greatest impact in terms of helping to facilitate business growth.Originality/valueA novel feature of the models is the incorporation of entrepreneurial traits and whether there were any collaborative joint venture arrangements.

Critical success factors for partnerships in the oil and gas contracting industry

The advent of mega LNG projects in Australia has encouraged the Australian contracting industry to establish partnerships with local or international peers to bolster capability and take advantage of larger work scopes to handle the contracting risks. The types of partnerships generally fall into three broad categories: Unincorporated joint ventures formed between partner companies, specifically to win and deliver a project. Each partner retains its individual entity and the relationship is finalised once the project is delivered. Incorporated joint ventures that take a long-term view to the partnership. The incorporated entity focuses on winning and delivering work on multiple projects, without a specific end date. Client contractor integration is the aligned relationships between clients and contractors to achieve delivery of optimal outcomes, thereby achieving mutual benefits. Clough’s history in partnering dates back to 1957, when Harold Clough started the company’s first joint venture with Christiani and Nielsen of Denmark. During a 55-year period, the company has delivered more than 130 projects in joint-venture or client contractor-integration arrangements. This rich history of partnering is used to explore the pros and cons of different partnering arrangements through a series of partnership case studies. Despite the relationship differences, there is a number of critical factors for successful partnerships, with the ultimate goal of adding value to the owner’s project. These factors, including focal interface points, financial and project management systems, and HSE unity and support, are explored using a case study about the BAM Clough Joint Venture, Clough’s most successful long-term partnership, which has been in place since 1964.

Making joint ventures work

No LNG capital project in Australia can survive without excelling in joint ventures; yet, the practicalities of them are often overlooked. The Australian oil and gas market has some of the most complex joint-venture arrangements in the world, and there is much we can learn from a global perspective about how to make them work. Too often, joint ventures are forced marriages between two or more parties who misunderstand each other and have widely differing aims. Organisations often rely too much on the joint-venture agreement, devote too few resources to the venture itself, and pay scant attention to any warning signs of trouble. The authors see that international oil companies typically have about 30–40% of their portfolios tied up in joint ventures. This is set to grow to about 70–80% during the next 5–8 years as they enter new territories in the hope of securing new resources. Although joint ventures are familiar ground for oil and gas companies, such operators often struggle to make them work. Cost overruns, schedule delays, compliance issues, renegotiations, and erosions of value are common. There are, however, ways to make joint ventures work more effectively, including: knowing what is expected of all parties and monitoring these expectations; improving transparency of information between joint-venture parties; ensuring expectations are realistic and continuing to validate them; paying particular attention in the first year of a joint venture; proactively strengthening existing joint ventures; and, staffing and resourcing joint ventures with care.

Allocation of greenhouse gas emissions to products and joint-venture partners

The oil and gas industry in Australia consists of a range of complicated joint venture (JV) and processing arrangements. With a future price on carbon in the Clean Energy Future Legislation Package, parties are keen to understand their carbon liabilities where they have interests (both operated and non-operated), and the extent to which a price on carbon can be passed on to customers. Many oil and gas companies have been reporting greenhouse gas emissions from their facilities to the Department of Climate Change and Energy Efficiency since 2009 using the National Greenhouse and Energy Reporting System framework. Subsequently, numerous companies from the sector have developed greenhouse gas reporting systems linking into existing oil and gas production allocation systems. These companies are now turning their attention to using this information to allocate greenhouse gas emissions from their facilities to specific oil and gas sales products, as well as to JV partners. This extended abstract, which includes a case study, explores these developments and discusses the key considerations when allocating greenhouse gas emissions to specific products and JV partners. Also explored are the following questions: What assumptions need to be made at the facility level for emissions associated with extracting, processing and refining specific products ready for sale? How robust and defensible are these assumptions? How do you build these assumptions into a system or model that allocates emissions to different products? What processes do you then put in place to allocate emissions to specific JV partners, and what information will be reported to them and what quality and assurance processes need to be in place to provide comfort to your JV partners of the robustness of the numbers? How will the costs associated with carbon be allocated?

The Potential of Small Tourism Operators in the Promotion of Pro-Poor Tourism

South Africa, like many developing countries, views tourism as a panacea to the evils of poverty that bedevil the country's rural African communities. Whilst there has been substantial growth in the tourism sector since 1994, the anticipated benefits have not materialized for those most in need of an improved quality of life. Work undertaken in the field of pro-poor tourism focuses predominantly on the large tourism actors and their potential role in the alleviation of poverty through the development of sustainable supply chains and joint venture arrangements. The role that could be played by the myriad small operators, who collectively comprise the bulk of the South African tourism industry, has largely been ignored. This article argues that greater attention should be paid to the cumulative potential of small tourism operators to play a significant role in the alleviation of poverty through tourism to the mutual benefit of both operators and local communities.

Overview of natural gas sector developments in Trinidad and Tobago

PurposeWith over 100 years of commercial activity, Trinidad and Tobago's energy sector has demonstrated significant growth and dynamism. This paper aims to provide a historical account of gas sector developments and seeks to decipher the motivating factors and key policy positions of the government.Design/methodology/approachA review of policy framing documents in the gas sector is conducted. These are juxtaposed with historical information on hydrocarbon production, level of foreign direct investment and State participation. The impact on the country's economy in terms of energy revenues and gross domestic product (GDP) is also examined.FindingsOver the period 1962‐2007, daily average hydrocarbon production increased eightfold to 800,000 barrels of oil equivalent due mostly to natural gas. Total energy revenues and GDP have grown significantly. Contributing factors include an evolving fiscal regime to attract foreign investment, strategic State investments, joint venture arrangements, monopoly gas transmission and merchant roles and an effective institutional framework. Government stewardship, market forces and private sector investment moulded the sector. Recent measures include revisions to the fiscal regime and sector diversification aimed at sustaining the industry.Originality/valueEnergy sector developments of this small island economy have largely escaped the purview of the mainstream academic literature. Trinidad and Tobago's energy policy has not been well articulated or documented, and this paper serves to act as a springboard for further studies which may provide policy direction for other countries.

Getting involved in a joint venture

A joint venture is a legal entity formed between two or more parties to undertake an economic activity together. There is a multitude of joint venture arrangements currently in existence...

Local Content Policy and SMEs Sector Promotion: The Nigerian Oil Industry Experience

This study investigates the impact of Nigeria’s oil and gas industry Local Content policy and its implications for promoting higher participation of indigenous small to medium-sized firms within the industry. Here we present finding from multiple case studies conducted on three small to medium-sized firms and five semi-structured interviews conducted with key informants, all operating within the industry. The findings from the study reveals that the local content policy has not yet achieved significant success in enhancing higher indigenous participation, use of local technology, higher contract awards to indigenous firms and stimulating joint venture arrangements between indigenous and foreign oil firms. Specifically, issues such as lack of the local content Act, cumbersome prequalification and entry requirements, ill-equipped educational institutions, laissez-faire attitude of multinationals, ineffective monitoring and control by regulators, and inadequate financing options for indigenous SMEs still hinder the policy efficacy.

An Assessment of Risk Management in Joint Venture Projects (JV) in Malaysia

Construction joint ventures have attracted a lot of research interest over the last two decades. Joint venturing can allow participating companies to rapidly change the scale or scope of their businesses. However, joint ventures are often regarded as a risky business. The construction industry is associated with high degrees of risk in the nature of its business activities, operational environment and organization. The success of a construction project depends on the results it is supposed to achieve. But achieving results depends upon how well companies manage the risks that confront their projects. This paper aims to identify the risk factors associated with joint venture projects in the Malaysian construction industry at the project-specific, internal and external levels. The main factors crucial to joint venture success were identified from a literature review and through a questionnaire survey administered to both local and foreign construction organisations in Malaysia. The major risks factors were found to be the agreement of the contract, partner selection, control/equity, sub-contractors, renegotiations and training. The identification of these factors will assist the successful application of joint venture arrangements in construction projects in Malaysia and other similar economies. The major risks factors were found to be the agreement of the contract, partner selection, control/equity, sub-contractors, renegotiations and training.

Nurturing the Bangladesh–UK Friendship Bridge

External support for large new infrastructure assets in developing nations is essential in the early years of operation. This paper reports on the first six years of the 1·2 km long Bangladesh–UK Friendship Bridge, completed over the Meghna River in 2002 with the help of British expertise and funding. It explains how British and Malaysian operation and maintenance skills have been transferred to the Bangladeshi workforce through joint-venture and consultancy arrangements. It also reviews social and environmental impacts of the bridge, provides an overview of performance monitoring and reports on problems identified and solutions implemented by the project team from 2003 to 2008.

Coal seam gas—an increasingly significant source of natural gas in eastern Australia

The commercial production of coal seam gas (CSG) in Australia commenced in 1996. Since then its production has grown up significantly, particularly in the last five years, to become an integral part of the upstream gas industry in eastern Australia. The major growth in both CSG reserves and production has been in the Bowen and Surat basins in Queensland. Active exploration and appraisal programs with the first pilot operations were established in the Galilee Basin in 2008; however, an important reserve base has been built up in New South Wales in the Clarence-Moreton, Gloucester, Gunnedah and Sydney basins. There has been modest CSG production from the Sydney Basin for some years with commercial production expected to commence in the other three basins by or during 2010. Exploration for CSG has been undertaken in Victoria and Tasmania while programs are being developed in South Australia focussing on the Arckaringa Basin. Elsewhere in Australia planning is being undertaken for CSG exploration programs for the Pedirka Basin in the Northern Territory and the Perth Basin in Western Australia. CSG was being supplied into the eastern Australian natural gas market at 31 December 2008 at a rate of approximately 458 TJ per day (167 PJ per year). Queensland is currently producing 96.7% of this total. Approximately 88% of the natural gas used in Queensland is CSG. Currently, CSG accounts for nearly 25% of the eastern Australian natural gas market, estimated at 670 PJ per year. The production of CSG is now a mature activity that has achieved commercial acceptability, especially for coal seam derived gas from the Bowen and Surat basins. The recent proposals by a number of local CSG producers—in joint venture arrangements with major international groups—to produce liquefied natural gas (LNG) from CSG along with a number of merger and acquisition proposals, is testimony to the growing economic and commercial significance of the CSG sector. Should all of the proposed CSG based LNG projects eventuate, LNG output would be approximately 40 million tones per year. This will require raw CSG production to increase to approximately 2,600 PJ per year, resulting in a four fold increase from the present natural gas consumption in eastern Australia. The proved and probable (2P) reserves of CSG in eastern Australia at 31 December 2008 were 17,011 PJ or 60.2% of the total independently audited 2P natural gas reserves of 28,252 PJ. The Bowen and Surat basins with 16,120 PJ have the largest onshore gas reserves eastern Australia. In New South Wales, the 2P CSG reserves at the end of 2008 were 892 PJ, though this is expected to increase significantly over the next 12 months. Major upstream natural gas producers such as Origin Energy Limited and Santos Limited both hold over 50% of their Australian 2P gas reserves as CSG. The 1P reserves of CSG in eastern Australia at 31 December were reported as 4,197 PJ while the 3P reserves of CSG at the same date were 40,480 PJ. Most companies in the CSG sector are undertaking development work to upgrade their 3P reserves (and contingent resources) into the 2P category. The CSG resource in eastern Australia is very large. Companies with interests in CSG have reported in excess of 200,000 PJ as gas in place in the Bowen, Clarence-Moreton, Galilee, Gloucester, Gunnedah, Queensland Coastal, Surat and Sydney basins. The 2P reserves of CSG are expected to exceed 20,000 PJ by the end of 2009. A significant part of the expected large increase in 2P reserves of gas initially will be dedicated to the proposed LNG projects being considered for Gladstone. The major issues confronting the CSG industry and its rapid growth are concerned with land access, overlapping tenure (particularly in Queensland with underground coal gasification) the management and beneficial use of co-product formation water and gas production ramp up factors associated with the proposed LNG projects.

Multinational Companies And Joint Venture Investment Management Strategy: A Contemporary Diagnosis Of Nigeria\'s Oil Sector

This study brought to the fore, critical issues relating the Joint Venture Arrangement (JVA) prevailing in the Nigeria\'s oil sector. The JVA option was considered the best alternative strategy for optimizing Nigeria\'s oil returns and indigenous capacity building, since April 1971. questionnaire was designed and administered on a stratified random sample of 240 indigent senior officials of frontline oil sector organizations (with area/zonal offices) in Port Harcourt. Data analysis mainly involved in the application of chi-square (x2) statistical technique, which indicated that the JVA has made marginal contributions towards indigent executive/operative capacity building. It is therefore imperative for the parties to comprehensively make up for the functional lapses and partner effectively to promote entrepreneurial employment alternativesJORIND Vol. 3 (2) 2005: pp. 84-90

Sedimentary uranium in South Australia: a history of early exploration and discovery in the Lake Frome region

The potential for sedimentary uranium in South Australia was substantively overlooked for more than 60 years following the discovery of the Radium Hill uranium deposit in 1906, despite local knowledge of, and several expert visits to sedimentary uranium deposits in the Colorado Plateau region of the United States during subsequent years. In the late 1960s, a combination of factors including the commercial opportunity for nuclear power generation and the removal of Government export controls on uranium, coupled with increasing demand for mineral commodities generally, changed the situation, and led the US based Kerr McGee group to take an interest in uranium in South Australia in 1967. Their exploration quickly revealed anomalous uranium in Cenozoic sediments. Soon after, South Australian geologist Brian Fitzpatrick visited the Wyoming sedimentary uranium region on behalf of the OTP group, which then quickly secured exploration acreage over the sedimentary region, adjacent to the long-known Mount Painter uranium deposits in South Australia. Within 18 months, the Beverley uranium resource was discovered and a new sedimentary uranium province was revealed. Further discoveries followed at Honeymoon in 1972, Gould's Dam in 1974 and Oban in 1982. Critical factors in these subsequent discoveries were the joint venture arrangements including up to four separate parties and the inspiration provided by Professor Eric Rudd (University of Adelaide). Close liaison by explorers with the Geological Survey of South Australia also provided regional mapping, regional stratigraphic drilling, experimental geophysics and spore-pollen dating.

Disclosure dilemmas: disclosure issues in the Australian energy and resources sector

In light of the continuing buoyancy in commodity and energy prices and the related spike in mergers and acquisitions activity in the energy and resources sector, energy and resources companies’ disclosure obligations are coming under closer scrutiny, both during merger talks and in the ordinary course of business. Company directors and officers need to have a sound understanding of their disclosure responsibilities, so that they can navigate the disclosure minefield with confidence during important periods of growth and consolidation for their company and the sector in general. This paper will highlight key risks and considerations that energy and resources companies should be aware of when considering their disclosure obligations. A better understanding of several specific disclosure situations is provided, including: the enforcement regime that applies to energy and resources companies in relation to disclosure issues (including liability for individual directors and officers); disclosure obligations during merger discussions; appropriate disclosure responses when a bidder comes knocking; difficulties in providing information to prospective bidders; the application of ASX disclosure carve-outs to merger discussions—when they cease to apply; potential insider trading issues in a takeover context; the impact of joint venture arrangements on disclosure obligations; and, specific disclosure obligations for energy and resources companies and proposed changes to oil and gas reporting. Several recent incidents and prosecutions relating to public disclosure issues in the sector are examined to provide a clearer idea of the risks relating to non-disclosure or late disclosure.

Legitimate Lease Arrangement or Suspect Joint Venture?

Joint ventures, which have long been a focus of the federal government, are becoming the subject of even greater attention by federal and now state enforcement agencies. In the December 2006 installment of “Legal Counsel,” we discussed table-time arrangements involving nuclear medicine equipment because they were about to come under the Stark prohibitions against self-referrals. In this follow-up report, we review and evaluate the latest action taken against a radiology joint venture arrangement; only this time, it is a state, rather than a federal enforcement agency that is alleging wrongdoing by the parties.

Joint Venture Regulation under European Competition Laws: An Update

Abstract: This article examines the European approach to joint venture regulation. It updates previous analysis by examining the impact of modernisation reforms on joint venture regulation in Europe. It is argued that although the changes on the whole are conducive to joint venture activity, problematic aspects of regulation were either unaddressed, or could be provoked by, the reform. In particular, the substantive and procedural divide in legal treatment of ‘concentrative’ and ‘cooperative’ joint venture arrangements continues to engender some difficulty.

An analysis of the disposition of assets in a joint venture

The final disposition of assets at the conclusion of joint venture arrangements is important to an understanding of the motivation to pursue a joint venture and the wealth created by these collaborations. A comparison between conventional asset sales and asset sales occurring within a joint venture structure shows that the total wealth created is larger if the assets have been under shared control in a joint venture. Our results support the contention that the establishment of a joint venture creates an opportunity for a relationship-based exchange of information that can serve as a mechanism to transfer assets in the presence of a high degree of asymmetric information.

Social Times of Network Spaces: Network Sequences and Foreign Investment in Hungary

To model, from its inception, interenterprise network formation and its interaction with foreign investment across an entire epoch of rapid and profound economic transformation, the authors gathered data on the complete ownership histories of 1,696 of the largest Hungarian enterprises from 1987 to 2001. They develop a social sequence analysis to identify distinctive pathways whereby firms use network resources to buffer uncertainty, hide or restructure assets, or gain knowledge and legitimacy. During this period, networked property grew, stabilized, and involved a growing proportion of foreign capital. Cohesive networks of recombinant property were robust, and in fact integrated foreign investment. Although multinationals, through their subsidiaries, dissolved ties in joint venture arrangements, the authors find evidence that they also built durable networks. These findings suggest that developing economies do not necessarily face a forced choice between networks of global reach and those of local embeddedness.

Selecting partners in an International Franchise Organisation

Whilst there has been research into the selection of partners in joint venture arrangements, there has been little investigation into the selection process involved in selecting franchise partners. This paper aims to provide an insight into the process of selecting potential franchise partners in the European Division of an international organisation. Interviews, observations and document analysis were used as qualitative data collection techniques. Findings suggested that the organisation employed both partner and task related criteria to select potential franchisees. However, the process of selection is not just about employing a number of selection criteria, it is a substantial multidimensional organisational activity which involves human dynamics. The paper discusses the real-life complexities of selecting franchise partners and illuminates the challenges franchising organisations face internationally in their determination to grow.