Presentation given to the EITI Board in Abijdan, 16 October 2013.

1. How extractives contracts interact with
governance
Presentation to the EITI Board
Abidjan, October 16th, 2013
Johnny West, OpenOil

2. Four rules of thumb about extractives
contracts
1)Contracts live in a complex natural habitat
2)Negotiation is permanent
3)There is a lot NOT in the contracts
4)Contracts are a tangled web

3. 1) Contracts in their natural habitat
National legal framework
Regulations

Extractives sector laws

Constitution

General laws (eg labour, environment, human rights)
International legal framework

Conventions

Investment Treaties


4. Which can be very different...

5. 2) The contract as framework for
permanent negotiation
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”

6. “as soon as reasonable”

7. Renegotiation within the contract

8. 3) What extractives agreements don't
include...
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.

9. Formula, not numbers (Ghana)

10. Afghanistan Technical Data 1

11. Afghanistan Technical Data 2

12. 4) The contract as complex web
Paperchase: how long does an agreement last?
(Iraq)



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Article 3: Term of Contract
Article 1: Definitions
Article 39: Signature, Ratification and Effective Date
But btw, please read the whole contract...

13. Swings and roundabouts

14. Swings and roundabouts

15. Four rules of thumb about extractives
contracts
1)Contracts live in a complex natural habitat
2)Negotiation is permanent
3)There is a lot NOT in the contracts
4)Contracts are a tangled web

16. The challenge of contracts in the
governance space





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, auditorgeneral, local.
Negotiation and monitoring stages.
Government brief is inherently more complex

17. But the picture is changing... slowly...



Government learning curve is accelerating
Contracts are becoming more standardised
Flexible (sliding scale) terms becoming more common

18. Ecuador: civil society voice

19. Peru: interactive mapping

20. Resourcecontracts.org

21. Global compare and contrast...

22. Public domain analysis

23. Public interest financial modelling.
This...

24. ...could turn into this...

25. ...and this...

26. Patterns start to emerge...

27. thank you for listening
johnny.west@openoil.net