Evolving Oil & Gas Contracts and Tax and Regulatory Risks

Andrew J.W. Haynes, B.A., LL.B., Deputy General Counsel (Group), BG Group plc, U.K

In light of the recent resurgence of resource nationalism and the current economic troubles, natural resources companies are once again facing substantial risks to their investments, and their returns on investments, arising from governmental actions. However, these risks are much less about expropriation or confiscatory taxation as in the past, and are increasingly more to do with subtle changes to tax regimes, local content demands and customs or other regulatory changes. Many industry contracts entered into in the past have not fully addressed such risks, and more refined contracting strategies may be required by investors to adequately address these newer more subtle risks. This paper outlines some personal reflections of the author from the perspective of an international energy investor, given his involvement in oil & gas projects in 5 continents over the past decade; however, any reflections in this paper should not be considered to be those of the author’s employer nor to be referring to any projects of the author’s employer but rather to the experience of international oil companies (IOCs) generally across a variety of jurisdictions.

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United Kingdom Contract Energy March 2010 Vol. 3, No. 10, Winter 2010

Andrew Haynes

Andrew J.W. Haynes is the Deputy General Counsel (Group) of BG Group plc based in the United Kingdom. Andrew joined BG Group in 2004 as BG´s Mergers & Acquisitions lawyer, and has since served BG Group as Regional Legal Manager for Asia & the Middle East and as Chief Counsel for South America. Prior to joining BG Group, Andrew was in private practice with the law firm of Herbert Smith in London, working on a variety of mergers & acquisitions, corporate and commercial transactions. He began his professional career in Alberta, Canada in 1996 with the law firm of McLennan Ross. Andrew is a Solicitor and member of the Law Society of England & Wales, a Barrister & Solicitor and member of the Law Society of Alberta (Canada) and a Registered Foreign Lawyer with the Brazilian Bar Association. He holds a Bachelor of Arts Degree from the University of Ottawa, and a Bachelor of Laws from the University of Alberta in Canada.

BG Group

BG Group is a is a world leader in natural gas, with a strategy focused on connecting competitively-priced resources to specific, high-value markets. Active in more than 25 countries on five continents, BG Group has a broad portfolio of exploration and production, liquefied natural gas, transmission and distribution and power generation business interests. It combines a deep understanding of gas markets with a proven track record in finding and commercialising reserves. Whilst headquartered in the United Kingdom, over 60% of the talented professionals who make up the BG Group team are located outside the U.K. BG Group is a publicly listed company on the London Stock Exchange and is also listed on the US over-the-counter market known as “International OTCQX”.

United Kingdom Contract Energy March 2010 Vol. 3, No. 10, Winter 2010