This chapter introduces the general nature and organisation of the international energy industry, specifically as it relates to international arbitration practitioners. The international energy industry is the single largest user of international arbitration,[2] and thus it is of particular interest to arbitral practitioners. Many arbitral advocates and arbitrators will be involved at some point in their careers with the industry. For its part, given its breadth and complexity and the size of many controversies, the industry has need of a truly international, neutral and tailored mechanism for resolving disputes, and that need is addressed by international arbitration.
The breadth and complexity of the energy industry stems from its truly international scope, the nature and availability of energy sources, the multitude of transactions, actors and stakeholders, as well as from its evolving nature. Traditional energy sources – oil, gas, coal and nuclear power – have been complemented with the expanding field of alternative energy (e.g., solar, wind, geothermal, biomass, hydrogen and hydropower). The transactions involved in the industry range from bidding arrangements to exploration, drilling, exploitation, transportation, marketing and many more.
Despite various mergers of private oil companies, the participants in the industry are quite robust and diverse. The industry is no longer dominated by the ‘seven sisters’[3] – the original ‘major’ oil companies – but instead, independent and national oil companies are strong players in the field. In fact, state oil companies today dominate the industry in terms of reserves. Various oil-service companies are also important participants. Additionally, the economic viability of certain projects has changed dramatically, given the influence of geopolitics, and the level and volatility of oil prices. In turn, this has led in great part to the increased need to carry out decommissioning activities.[4] The availability of new technologies for exploration, exploitation and transportation have also altered the global oil and gas market. All these developments have spurred new laws and environmental policies regulating the industry.
Although defining the breadth and complexity of the international energy industry is difficult, this chapter outlines some general background and areas of focus, although one should note that the industry will inevitably change in the coming years.
It is estimated that US$48 trillion of investment will be required to supply the world’s energy needs up to the year 2035.[5] Investing in clean energy projects and infrastructure is also estimated to require approximately US$4 trillion by 2030.[6] According to the International Energy Agency, nearly two-thirds of this investment will take place in emerging economies.[7] And while most of the energy resources are state-owned, private sector investment is essential to meeting energy investment needs.[8] This in turn requires foreign direct investment and the participation of international energy companies.
The energy sector began to develop in the first half of the twentieth century and grew rapidly. In the early years, many governments, in need of foreign investment and technology, granted generous concessions to international petroleum companies. Beginning in the 1950s and accelerating in the 1970s, numerous concessions were expropriated or renegotiated, providing governments with a higher percentage of the revenues and greater control over production.[9] Some commentators have suggested that modifications and renegotiations are inevitable given the lengthy lifespan of energy investments, emerging laws and changing political climates.[10] Nevertheless, the sanctity of contractual commitments and legal security remain critical to energy investments.
Most countries follow the regalian or domanial systems regarding ownership of subsurface minerals. Under these systems, subsurface minerals belong to, or are controlled by, the sovereign.[11] Thus, international petroleum companies need permission from the state to operate in these countries.[12] States define the conditions for investors to carry out their activities, and these are ultimately reflected in a granting agreement (i.e., a legal instrument by which the government directly, or through a state-owned company, grants the private oil company the right to certain interests in the hydrocarbons within the country, either in place or after production).[13] The types of granting agreements vary depending on the host country’s laws, economy, and social and political policies.
Generally, but certainly not invariably, one could categorise the granting instruments geographically by saying that international petroleum companies enter into production sharing agreements (PSAs) with governments in Asia and Africa, licences with governments in Europe and service agreements (or risk service agreements) with governments in South America.[14] However, these geographical categorisations are not invariable, and these different types of agreements are adopted by some countries in the other geographical areas as well. Moreover, various elements of each of these types of agreements may be combined in a hybrid contract.
A PSA often requires the participation in drilling and production activities of a local, government-owned company, often including a carried interest for any exploratory wells. Through the government-owned company’s participation in the project, as well as royalties, bonuses and taxes paid to the government, the government’s percentage ‘take’ of the total revenues of a project is often substantial.[15] The percentage of government take will vary from country to country, depending on many factors, such as historical agreements, costs, and geological and financial risks. The government take is an important consideration for international oil companies in deciding whether to invest in a given country, and at times it can be a matter of competition between governments for hydrocarbon investments.
An international petroleum company entering into an agreement with a government may act on behalf of a consortium of companies that enter into a joint operating agreement to define, among themselves, their rights and obligations in the venture. The joint operating agreement will typically attach an accounting procedure to determine the method of calculating the costs to be shared.[16] The consortium usually acts through one of its members, which serves as the operator, although the consortium’s decisions are usually made by a committee, with the operator carrying out the decisions. To fund operations, the operator issues cash calls to the members, the prompt payment of which is necessary to ongoing operations.
The evaluation, bidding, negotiation and acquisition phases of a project may be governed among the consortium members by a participation agreement, a study and bidding agreement, or a confidentiality agreement.[17] Companies may agree to areas of mutual interest in which they bind themselves to participate only with one another in acquiring future interests within a defined area. Drilling agreements must be negotiated among oil companies and drilling companies. Many of these agreements now involve expensive offshore drilling platforms or ships, and may involve extensive coordination with other oil service companies. If the drilling is successful and production is economic (commercial), offtake agreements will be entered into by the members of the consortium to set out the method and procedure by which they will nominate and lift their share of the production for shipping and export.[18] If one consortium member takes more than its share in a given period, balancing agreements may be necessary. Transportation agreements of various types will also be necessary for shipment, generally by sea or by pipeline. Finally, crude oil sales or exchange agreements will be negotiated by the companies to dispose of their product. Each of these agreements, and each step of this chain, involves numerous issues that may create a dispute and a need for international arbitration.[19]
International contracts not only deal with oil, but also with natural gas. Natural gas is found in oil reservoirs (associated gas) or by itself (non-associated gas). The traditional methods for natural gas exploration are the same as for oil.[20] In the past, wells drilled for oil that discovered only natural gas were often plugged because of the expense of transporting the gas and the lack of a natural gas infrastructure in most countries.[21] This has changed because of innovations in extraction and transportation technologies, and the development of gas infrastructures in many nations. These innovations have changed the landscape of the oil and gas industry and created new international issues.
The increase in natural gas production has facilitated advancements in transportation technology. In the past two decades, companies have become more willing to bear the expense of facilities to transport natural gas by pipeline, to construct liquefied natural gas (LNG) facilities, or to consume gas locally through power plants. Historically, many contracts with host governments for oil exploration and production included only a short provision stating that if non-associated natural gas was discovered in commercial quantities, then the parties would negotiate a new agreement for the exploitation of the gas. This agreement to negotiate has raised challenges for the international petroleum industry.[22]
Horizontal drilling and hydraulic fracturing, or ‘fracking’, is yet another significant technological advancement.[23] Fracking allows access to oil and gas trapped in impermeable rock.[24] It was pioneered in the United States and has returned the US to ‘the role of energy-producing super-power’.[25] Other countries are considering implementing this technology, including China, Argentina, Australia, Canada, Mexico and South Africa.[26] This is likely to require foreign investment and international partnerships between investors and countries. Although fracking has proven successful for production, there are environmental concerns that may slow down or prevent its implementation in several jurisdictions. Only time will tell the scope and range of foreign investment that will take place in this area, but a need for international arbitration is probable.
Other interests often intersect with the energy sector, such as environmental issues. They have risen to prominence through efforts involving corporate responsibility, brand management, environmental activism and changing regulations.[27] Moreover, environmental legal norms have become increasingly internationalised.[28] There are now more than 20 multilateral environmental treaties relating to the environment and at least the beginnings of the emergence of a customary international law on the subject.[29] Environmental issues are increasingly involved in international arbitration, and are occasionally raised as counterclaims by respondent states in investment arbitrations.[30]
The energy industry is essentially divided into three segments: upstream, downstream and midstream. These segments basically represent four main activities necessary to the energy industry: producing, transporting, refining and selling at retail.[31] ‘Upstream’ refers to exploring for oil and gas reservoirs, drilling wells and producing hydrocarbons, also known as exploration and production.[32] The downstream segment entails refining, processing, distributing and marketing the oil and gas products.[33] Midstream refers to the transportation of oil and gas in-between the initial production and the end user of the hydrocarbons. Note that these three segments are governed by different laws and are subject to different administrative and environmental regulations.[34]
Private energy companies are often classified as a ‘major’ or as an ‘independent’ company. To be classified as a major, a company must be an ‘integrated’ oil company, taking part in producing, transporting, refining, and selling oil and gas products at retail.[35] Independent companies are those that engage in fewer of these four main activities.[36] Initially, the industry was controlled by private international oil companies. However, in recent decades they have taken a backseat to national or state-owned oil companies.
Oil and gas producing states are, of course, essential participants in the energy industry. The energy sector has long been considered essential to security, geopolitical and vital national economic interests.[37] This makes investments in the energy sector especially vulnerable to regulatory change and political risk.[38]
As the international energy industry developed, host states evolved from being a ‘passive’ business partner (e.g., old concession contracts) to being active and controlling forces (e.g., nationalisation, PSAs, state-owned oil companies and regulation).[39] States may participate in the energy industry through a national oil company or through an energy ministry or other government agencies. This will vary depending on the country’s national and legal culture. Many countries have hydrocarbon laws defining government policies, organising the industry, and creating incentives and disincentives for oil companies.
The position of a host state on various issues may shift over time, from imposing inflexible contractual terms to promoting investment-friendly conditions,[40] to changing their laws and regulations, often depending on popular sentiment or the need for investments depending on oil prices and whether reserves or production are declining.
Take the case of Mexico, for example. In 1938, the Mexican government confiscated all foreign oil companies’ concession rights within the country.[41] This was seen as a patriotic achievement and is still commemorated today.[42] Since then, Mexico’s energy sector has been monopolised by its national energy company, Petróleos Mexicanos (Pemex). But in 2013, declining production and the need for new technology pushed Mexico towards instituting energy reforms allowing private investors to enter its market.[43] Yet, again, starting in 2021, Mexico has enacted a series of administrative measures shaping those very reforms that had opened up the country’s oil and gas sector to foreign investment.[44]
Additionally, host states not only play the role of ‘business partner’, they also fulfil a regulatory role because they decide the energy and environmental policies that an international petroleum company must follow, and they interpret and apply those regulations.
The creation of the Organization of the Petroleum Exporting Countries (OPEC) in 1960 was a pivotal development in the energy industry. OPEC is a permanent, inter-government entity currently consisting of its five founding states – Iran, Iraq, Kuwait, Saudi Arabia and Venezuela – and later joining members (to date, Libya, the United Arab Emirates, Algeria, Nigeria, Gabon, Angola, Equatorial Guinea and Congo).[45] It is based in Vienna, Austria.
OPEC was created to prevent a precipitous drop in crude oil prices then affected by the discovery of huge new reserves.[46] Over time, OPEC’s role became more prominent, and it became a vehicle for states to challenge the stance of international oil companies regarding ownership rights, to encourage the renegotiation of international oil agreements and to engage in cartel pricing of oil.[47]
Today, national oil companies have a fundamental role in the industry. Not only do they own approximately 85 per cent of oil reserves,[48] they also represent the majority of volume growth in the industry.[49] Reportedly, they control at least US$3 trillion in assets and are responsible for producing most of the world’s oil and gas.[50] They were initially created in response to security and nationalistic concerns and as vehicles for state participation in the energy industry.[51] But they are now deemed by some to be the ‘true giants’ of the energy sector.[52]
Of the 20 companies ranked as the biggest in the industry in terms of ownership of reserves of oil and gas, 16 are national oil companies.[53] National oil companies are usually created by statute or decree. Generally, all their ownership interest is held by the state and they can vary in corporate form.[54]
National oil companies sometimes face issues that private companies do not necessarily face. For example, national oil companies may be subject to heightened political and social pressure, or they may be required to pay higher wages or adopt inefficient production methods to favour employment.[55] Notwithstanding the above, the role of national oil companies has grown from local participants to major international players, often investing in oil reserves located in other countries.
Natural gas has received separate treatment in the energy industry owing to the difficulty and expense associated with its transportation. For this reason, it has traditionally been produced and marketed for domestic consumption,[56] at least in those countries with a developed infrastructure for using natural gas. Thus, cross-border transportation of natural gas was once minimal in comparison with oil. But during the past few decades, the landscape has changed in response to energy demand, changes in oil prices, technological advances and environmental considerations (since it is a cleaner form of energy).
Natural gas is abundant in comparison with other fossil fuels.[57] However, it is difficult to transport given its physical nature and volatility.[58] These challenges led to the traditional wasteful use of natural gas by flaring it (burning it) on-site.[59] Many countries have now constructed a domestic infrastructure for using natural gas, often by building gas-fired power plants. Thus, they make use of the natural gas locally without having to transport it vast distances.
The most cost-effective way to transport natural gas is through high-pressure pipelines,[60] but natural gas can also be transported in specialised ships once it has been liquefied (LNG). This process requires the cooling of the gas to -160° Celsius, storing it in insulated tanks, transporting it in specialised ships and regasifying it at destination plants.[61] This requires the construction of multibillion-dollar LNG facilities. But the need for energy sources and the desire to make use of natural gas discoveries have spawned a global market for LNG.
A granting contract typically forms the foundation of an international oil and gas project.[62] These evolved from concession contracts to production-sharing agreements, risk service contracts and licences.[63]
The oldest is the concession contract,[64] which derived from the contracts used in the United States’ mining industry.[65] A concession may refer to various types of contracts, permits, licences or instruments, depending on the applicable legal system.[66] Under the early concession agreements, a host country would essentially concede control over its energy resources to an international petroleum company.[67] These early agreements had certain common features:
Initially, concession agreements were negotiated on a case-by-case basis,[69] as international petroleum companies attempted to discover reserves and operate in new host states.
The industry has generally shifted away from concession contracts in favour of PSAs. To a significant extent, PSAs are representative of the changes that the petroleum industry has experienced since the 1970s.[70] They were first popularised in Indonesia, but were quickly adopted by other countries.[71] Under a PSA, the host country retains ownership and the right to exploit resources while the international petroleum company is more akin to a ‘contractor hired to perform the operations’,[72] although this is not an entirely accurate analogy since under many PSAs, oil companies can report in their public filings (e.g., Securities and Exchange Commission filings in the United States) a percentage of the hydrocarbon reserves as their own.[73] This is particularly important to companies because their stock price may be driven, in part, by their reserve profile. The contractor’s payment under a PSA involves an entitlement to recover costs once operations are successful (commercial) and to a share of the production as profit during a determined amount of time.[74] If the area under contract is unproductive, the contractor receives no profit.[75] Thus, the financial and geological risk of finding oil in commercial quantities falls on the private oil companies. Typically, the company has a certain number of years to explore for oil in a defined geographical area and drill a minimum number of wells, after which it must relinquish back to the state any area from which no production is likely to occur expediently.
Some countries use risk service contracts, which are similar to PSAs. Under this type of agreement, the contractor usually provides the funds required for exploring and developing petroleum resources. The host state will allow the contractor to recover its costs through the sale of a certain percentage of the oil or gas once the project is successful. The host state will also pay the contractor a fee based on a percentage of the revenues. The state retains ownership of the resources and production.[76]
Other host countries – the United Kingdom, for example – use a licensing system. The licences vary depending on the location (onshore, offshore) and the stage of the operation (exploration or production).[77] Licences essentially entitle a petroleum company to operate in a specific geographical area in exchange for a royalty or fee.[78] In general, the government has ample policing powers over the licensee, and the licence can be revoked for a number of reasons.[79]
The Association of International Petroleum Negotiators is a well-known, independent, not-for-profit association for professionals involved in the energy industry.[80] It has developed a robust collection of model contracts, including virtually all the categories mentioned above, as well as certain commentaries. These can be found on its website and provide a more detailed understanding of the various contracts’ clauses and differences.
A foreign investment dispute is a controversy between an investor from one state and a foreign government concerning an investment in the host state.[81] Foreign investment has been given protection through international treaties, conventions and by customary international law, and over time a subset of international law regulating investment disputes has emerged. Today, there is a sizeable number of international arbitral awards relating to the petroleum industry.
Under traditional international law, corporations and individuals did not have standing to bring claims directly against governments. Diplomatic protection was the only remedy available to a citizen of a state with a claim against a foreign government. Under this regime, the foreign investor would bring grievances to the domestic courts of the host state or to the officials of his or her own country. The investor’s government would then have the discretion to espouse the claim against the foreign government and protect the investor’s rights through an exchange of diplomatic notes or, more recently, by bringing a claim before the International Court of Justice.[82]
When the national governments of host states began to expropriate foreign-owned projects in the 19th century, they purported to rely on the international law principle of territorial sovereignty. Local courts were often viewed as unsympathetic to foreign investors or were required to give effect to the local expropriating decree, leading the investors to turn to their own governments for assistance. The investors’ governments, if they were inclined to help their nationals, responded based on the international law principle of nationality (in this context, the state’s interest in representing its nationals).[83]
Diplomatic protection proved inadequate for many reasons. For the investor, the availability of the remedy was unpredictable and subject to a government’s many other interests. For the government, it was an unwieldy instrument for dealing with foreign investment issues. The intervention of the investor’s government inevitably created conflicts with the host state. It also had the potential to affect relationships with other states. As the problems that governments faced became more complex and governments developed larger organisations to handle them, it became clear that more economical alternatives to diplomatic protection and intervention were necessary. But an analogue to national adjudication was not feasible, for international law at that time did not recognise natural or juridical persons as proper subjects. Thus, the international community looked for instruments that could provide an adequate forum and remedy.[84]
In 1965, under the sponsorship of the International Bank on Reconstruction and Development, the Convention on the Settlement of Investment Disputes between States and Nationals of Other States was executed and came into effect in 1966 (the ICSID Convention). The Convention created ICSID to administer arbitrations between contracting governments and nationals of other contracting governments for disputes relating directly to an investment. ICSID, in turn, promulgated sets of arbitral and conciliation rules. ICSID was designed specifically to administer arbitrations of foreign investment disputes.[85] Unlike other major arbitral institutions, ICSID has jurisdictional requirements.[86] At the time of writing, 157 countries have ratified the ICSID Convention and seven countries have signed it.[87]
Reports show that almost 40 per cent of all cases registered with ICSID (and its Additional Facility) between 1972 and 2012 involved the energy sector, with oil, gas and mining disputes representing 29 per cent of all ICSID claims in 2021.[88]
The United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards (the New York Convention) was adopted on 10 June 1958 and entered into force on 7 June 1959. This treaty is the most significant contemporary legislative instrument relating to international commercial arbitration.[89] It provides a universal constitutional charter for the international arbitral process and has proven to be an effective framework for enforcing international arbitration agreements and arbitral awards.[90] It is of relevance in enforcing all non-ICSID investment arbitral awards; ICSID cases exclusively involve the ICSID Convention.
The Energy Charter Treaty (ECT) came into effect in 1994. It now includes more than 50 member states, mostly in eastern and central Europe, and the European Union and the European Atomic Energy Community.[91] It is the only multinational treaty specifically dealing with investment issues in the energy industry.[92] The International Energy Charter explains that ‘the fundamental aim of the Energy Charter Treaty is to strengthen the rule of law on energy issues, by creating a level playing field of rules to be observed by all participating governments, thus minimising the risks associated with energy-related investments and trade’.[93] It ‘ensures the protection of foreign energy investments based on the principle of non-discrimination’.[94] The ECT also provides government consent to ad hoc international arbitration to resolve disputes with foreign investors arising from their substantive obligations. More than 50 arbitrations have been brought under the ECT.
Modern bilateral investment treaties (BITs) were first adopted in the 1960s by European countries seeking to protect their nationals’ investments abroad.[95] The United States then followed suit in the 1970s. The proliferation of BITs signalled an important landmark in international relations and arbitration. To date, almost 3,000 BITs have been signed. They contain similar provisions, leading some scholars to conclude that they may now express the customary international law standards for foreign investment.[96] These treaties create actionable standards of conduct for governments in their treatment of foreign investment, and typically provide for international arbitration to resolve disputes arising from allegations of a violation of the treaty.
During the past few decades, international tribunals have addressed many of the issues and facets of the energy industry. These have included claims under bilateral and regional treaties as well as customary international law dealing with expropriations, unfair and unequal treatment, and denial of justice. This guide addresses them by dividing them into sections, each of which highlights a different facet of the international energy industry.
It is hoped the reader will find in these pages a useful introduction and worthwhile information concerning the arbitration of international energy disputes.
[1] Doak Bishop is a partner, and Eldy Quintanilla Roché and Sara McBrearty are senior associates, at King & Spalding.
[2] See, e.g., ICSID Annual Report, p. 27 (2021) (noting that 29 per cent of cases registered in 2021 involve the oil, gas and mining industry and 14 per cent the electric power and other energy industry); ICSID Annual Report, p. 25 (2020) (noting that 30 per cent of cases registered in 2020 involve the oil, gas and mining industry and 20 per cent the electric power and other energy industry).
[3] Anglo-Persian Oil Company, Gulf Oil, Standard Oil of California, Texaco, Royal Dutch Shell, Standard Oil of New Jersey and Standard Oil Company of New York.
[4] Decommissioning is the industry-preferred term for the work necessary to manage and dispose of oil and gas infrastructure and to minimise their environmental footprint once they have reached the end of their economic life. The term ‘abandonment’ is also used to describe decommissioning activities. See Flávia Kaczelnik Altit and Mark Osa Igiehon, ‘Decommissioning of Upstream Oil and Gas Facilities’, in Oil And Gas, A Practical Handbook, Global Business Publishing (2009) at 257; Peter Cameron, Decommissioning of Oil & Gas Installations: The Legal & Contractual Issues, Association of International Petroleum Negotiators (1998), p. 4.
[5] International Energy Agency, ‘World Energy Outlook’, 11 (2014), available via www.worldenergyoutlook.org/investment.
[6] International Energy Agency, ‘World Energy Outlook’, 18 (2021), available via www.iea.org/reports/world-energy-outlook-2021.
[7] International Energy Agency, ‘World Energy Outlook’, 11 (2014), available via www.worldenergyoutlook.org/investment.
[8] See, e.g., id., at 11 to 12
[9] R Doak Bishop, ‘International Arbitration of Petroleum Disputes: the Development of a Lex Petrolea’, XXIII YB Com. Arb. 1131, 1151 (1998).
[10] See, e.g., Crina Baltag, ‘The Energy Charter Treaty: The Notion of Investor’, 25 Int’l Arbitration Law Library, 2 (2012) (stating that ‘the life span of energy investments often forces the modification of the terms of the agreements between investors and governments’) (internal citations omitted); David W Rivkin, Sophie J Lamb, Nicola K Leslie, ‘The Future of Investor-State Dispute Settlement In The Energy Sector: Engaging With Climate Change, Human Rights and The Rule Of Law’, Journal of World Energy Law and Business, 2 (2015) (stating that investments in the energy industry are especially vulnerable to regulatory change and political interest).
[11] Patrick Wieland, ‘Going Beyond Panaceas: Escaping Mining Conflicts in Resource-Rich Countries Through Middle-Ground Policies’, 20 NYU Envtl LJ 199, 208 (2012–2014); Thomas W Merrill, ‘Four Questions about Fracking’, 63 Case W Res L Rev 971, 977 (2012–2013).
[12] Thomas W Merrill (footnote 11, above), 971, 977.
[13] Claude Duval, et al, ‘International Petroleum Exploration and Exploitation Agreements: Legal, Economic & Policy Aspects’, 23 (2009).
[14] R Doak Bishop (footnote 9, above), 1131, 1152.
[19] R Doak Bishop (footnote 9, above), 1131, 1152.
[20] Claude Duval, et al (footnote 13, above), 182.
[21] R Doak Bishop (footnote 9, above), 1131, 1152.
[23] Thomas W Merrill (footnote 11, above), 971, 972; John M Golden, Hannah J Wiseman, ‘The Fracking Revolution: Shale Gas a Case Study in Innovation Policy’, 64 Emory LJ 955, 957 (2014–2015).
[24] Thomas W Merrill (footnote 11, above), 971, 972.
[25] John M Golden, Hannah J Wiseman (footnote 23, above), 955, 957. See also Alexandra B Klass, Danielle Meinhardl, ‘Transporting Oil and Gas: US Infrastructure Challenges’, 100 Iowa L Rev 947, 965 (2014–2015).
[26] See, e.g., John M Golden, Hannah J Wiseman (footnote 23, above), 955, 1028; Michael Klare, ‘From Scarcity to Abundance: The Changing Dynamics of Energy Conflict’, 3 Penn St JL & Int’l Aff 10, 22 (2014–2015).
[27] See, e.g., David W Rivkin, Sophie J Lamb, Nicola K Leslie (footnote 10, above), 3 to 4 (2015).
[28] Tseming Yang, Robert V Percival, ‘The Emergence of Global Environmental Law’, 36 Ecology Law Quarterly 615 (2009).
[29] David W Rivkin, Sophie J Lamb, Nicola K Leslie (footnote 10, above), 3.
[30] See e.g., Perenco Ecuador Limited v. Republic of Ecuador, ICSID Case No. ARB/08/6; Burlington Resources Inc. v. Republic of Ecuador, ICSID Case No. ARB/08/5; David Aven et al. v. Republic of Costa Rica, UNCITRAL Case No. UNCT/15/3.
[31] Ernest E Smith, et al, International Petroleum Transactions, 54 (2nd edition).
[32] Oil and Gas Industry: A Research Guide, Library of Congress available at https://guides.loc.gov/oil-and-gas-industry/upstream (stating ‘The upstream segment of the oil and gas industry contains exploration activities, which include creating geological surveys and obtaining land rights, and production activities, which include onshore and offshore drilling’); John Schumacher, ‘A Primer on the Oil and Gas Industry’, Facts & Findings, The Magazine for Paralegals (1 July 2014).
[34] Claude Duval, et al. (footnote 13, above), 176.
[35] Ernest E. Smith, et al. (footnote 31, above), 54 (2nd edition).
[38] See e.g., David W Rivkin, Sophie J Lamb, Nicola K Leslie (footnote 10, above), 2.
[39] Claude Duval, et al (footnote 13, above), Sections IV to V.
[41] R Doak Bishop (footnote 9, above), 1131, 1151.
[42] It is commemorated on 18 March, the anniversary of the issuance of the first order that expropriated the assets of almost all the foreign companies operating in Mexico. The order was issued by Mexican President Lazaro Cardenas.
[43] See, e.g., Gaurav Sharma, ‘Mexico’s Energy Sector Reform Worth the 76-Year Wait’, Forbes (15 August 2014), www.forbes.com/sites/gauravsharma/2014/08/15/mexicos-energy-sector-reform-worth-the-76-year-wait; Gaurav Sharma, ‘Energy Market Reforms Keep Mexico’s Optimism High Despite Oil Price Slump’, Forbes (11 March 2015), www.forbes.com/sites/gauravsharma/2015/03/11/energy-market-reforms-keep-mexicos-optimism-high-despite-oil-price-slump.
[44] See, e.g., Andrew Schneider, ‘Mexico’s President is Reversing Energy Reforms, Hurting his Country’s Oil Production – and the US,’ Houston Public Media (22 April 2022), www.houstonpublicmedia.org/articles/news/in-depth/2022/04/12/422990/mexicos-president-is-reversing-his-countrys-energy-reforms-hurting-his-countrys-oil-production-and-the-u-s/.
[45] List of OPEC member countries available at www.opec.org/opec_web/en/about_us/25.htm.
[46] Claude Duval, et al (footnote 13, above), 48.
[49] See Christopher Helman, ‘The World’s Biggest Oil and Gas Companies – 2015’, Forbes (19 March 2015), www.forbes.com/sites/christopherhelman/2015/03/19/the-worlds-biggest-oil-and-gas-companies.
[50] See, David Manley et al., ‘Hidden Giants,’ International Monetary Fund (December 2019), www.imf.org/Publications/fandd/issues/2019/12/national-oil-companies-need-more-transparency-manley.
[51] Ernest E Smith, et al (footnote 31, above), 58 to 59.
[52] ‘National Oil Companies: Really Big Oil’, The Economist (10 August 2006), www.economist.com/node/7276986.
[53] id.; Christopher Helman, ‘The World’s Biggest Oil and Gas Companies – 2015’, Forbes (19 March 2015), www.forbes.com/sites/christopherhelman/2015/03/19/the-worlds-biggest-oil-and-gas-companies.
[54] Ernest E Smith, et al (footnote 31, above), 58 to 59. Footnote 52 at 62.
[56] Thomas W Merrill (footnote 11, above), 971, 973.
[57] Ernest E Smith, et al., International Petroleum Transactions, 1025 (3rd edition).
[60] It is calculated that transporting natural gas is four to five times more expensive than transporting oil. See Ernest E Smith, et al (footnote 31, above), 1028.
[61] Claude Duval, et al (footnote 13, above), 182.
[62] Paul Michael Blyschak, ‘Arbitrating Overseas Oil and Gas Disputes: Breaches of Contract Versus Breaches of Treaty’, 27 Journal of Int’l Arbitration 6, 579 (2010).
[63] Claude Duval, et al (footnote 13, above), Sections IV to V (2009). These are the main (but not all) types of agreements in the energy industry.
[67] Paul Michael Blyschak (footnote 65, above), 579, 581.
[68] R Doak Bishop (footnote 9, above), 1131, 1151.
[69] Paul Michael Blyschak (footnote 65, above), 579, 581.
[70] R Doak Bishop, James Crawford, W Michael Reisman, Foreign Investment Disputes, Cases Materials and Commentary, 219 (Kluwer Law) (internal citations omitted).
[71] Claude Duval, et al (footnote 13, above), 69.
[73] Claude Duval, et al (footnote 13, above), 71.
[75] R Doak Bishop, James Crawford, W Michael Reisman (footnote 73, above), 216 (internal citations omitted).
[78] Paul Michael Blyschak (footnote 65, above), 579, 583.
[79] R Doak Bishop, James Crawford, W Michael Reisman (footnote 73, above), 220 to 221 (internal citations omitted).
[80] For more about the Association of International Petroleum Negotiators, see https://www.aipn.org/about-aipn/.
[81] R Doak Bishop, James Crawford, W Michael Reisman (footnote 73, above), 9.
[84] R Doak Bishop, James Crawford, W Michael Reisman (footnote 73, above), 1 to 4.
[87] See https://icsid.worldbank.org/about/member-states/database-of-member-states.
[88] David W Rivkin, Sophie J Lamb, Nicola K Leslie (footnote 10, above), 1 (2015); ICSID Annual Report, p. 27 (2021) (noting that 29 per cent of cases registered in 2021 involve the oil, gas and mining industry).
[89] Gary B Born, International Arbitration: Cases and Materials, 32 (2nd edition, Kluwer, 2015).
[91] R Doak Bishop, James Crawford, W Michael Reisman (footnote 73, above), 1; The Energy Charter Treaty, available at https://www.energycharter.org/process/energy-charter-treaty-1994/energy-charter-treaty/.
[92] Crina Baltag, ‘The Energy Charter Treaty: The Notion of Investor’, 25 Int’l Arbitration Law Library, 8 (2012).
[93] Overview of the Energy Charter Process available at https://www.energycharter.org/process/overview/.
[95] This occurred with the signing of the Germany–Pakistan bilateral investment treaty in 1959, which entered into force in 1962. Rudolf Dolzer, Christopher, Schreuer, Principles of International Investment Law, 6 to 7 (Oxford University Press, 2012).
[96] R Doak Bishop, James Crawford, W Michael Reisman (footnote 73, above), 1.
J William Rowley QC Twenty Essex
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