De-risking international energy deals

As energy firms move into countries with unfamiliar or unstable, political, legal and financial systems, local contractual advice is vital, write Jean-Pierre Douglas-Henry and Sashe Dimitroff*

THE POTENTIAL for renewed international oil and gas deal activity is apparent as signs of economic recovery emerge in developed economies. But, as with companies in other industrial sectors, energy firms must approach business negotiations cautiously and place renewed emphasis on reducing risk. While the importance of drafting contractual documents carefully is not new, an important element of assessing how international energy deals can be de-risked is to reconsider standard contractual clauses. Many energy companies with successful operating records in western Europe or North America are moving into countries where the political and legal systems are unfamiliar and, at times, treacherous.