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Presenter: Umirdinov Alisher D1 Graduate School of Law, Nagoya University September 24,2010 1.

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Presentation on theme: "Presenter: Umirdinov Alisher D1 Graduate School of Law, Nagoya University September 24,2010 1."— Presentation transcript:

1 Presenter: Umirdinov Alisher D1 Graduate School of Law, Nagoya University September 24,2010 1

2 Problem Identification Problem identification 1.Russia 2.Kazakhstan 3.Uzbekistan Purpose of research Methodology References Tentative structure(attached file) 2

3 Energy investment-mainly, gas and oil(petroleum) Difference: - Based on long-term contracts - High risk, high return - Exercise of State sovereignty - Application of public law 3

4 Direct expropriations (nationalizations): Iran- US Claims Tribunal, Ad hoc arbitrations from the nationalization of the oil industry in Iran and Libya, in 1970s Revival of direct expropriations (UNCTAD,2009) But, indirect expropriations : Starret Housing(1983), Philips Petroleum (1989), Petrobart Limited (2003), Nykomb (2003), Occidential (2004), CMS Gas(2005), EnCana(2006), LG&E Energy(2006) 4

5 In global business, history seems to be repeating itself in the context of political risks, asset expropriations/confiscation hazards, and politically motivated nationalizations that initially took place mostly in the sixties and seventies. The types of activities that took place in Iran, Libya, and Mexico are being seen now on a broader scale.( F.Robert BUCHANAN, Syed Tariq ANWAR) Currently, IOCs(International Oil Companies) are finding themselves in an entirely new environment in which the resource owners invoke their dominance and increasingly adversarial in their negotiation strategies.(F.Robert BUCHANAN, Syed Tariq ANWAR) Why? 5

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8 States can resort to a wide variety of techniques, short of direct expropriation, to achieve increased (or total) control of a foreign energy investment. The most common types of measures that have given rise to claims of indirect expropriation are: assuming management control, taxation, regulation and forced restructuring of investment contracts.(Oscar Garibaldi,2007) 8

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10 They are transition countries. Oil and gas production accounts for a substantial proportion of GDP and generates approximately half of all foreign exchange revenues. Natural resources are under control of state Gazprom and Rosneft of Russia, Kazmunaigaz of Kazakhstan and Uzneftgaz of Uzbekistan Property rights protection are weak. Globally growth of oil and gas prices 10

11 Yukos case-CEO charged with fraud and tax evasion in Sakhalin 2 case-cancellation of license due to environmental issues. British oil company TNK-BP in 2006, November and it was charged also by numerous systemic violations, such as violations of environmental and licensing rules. Russia is not yet member to ECT, Russia applies it provisionally and it increase the risk and hinder reducing financial cost, consequently project financing. (A.A.Konoplyanik) 11

12 Liman Caspian Oil BV and NCL Dutch Investment BV v. Republic of Kazakhstan (ICSID Case No. ARB/07/14): indirect expropriation and FET Caratube International Oil Company LLP v. Republic of Kazakhstan (ICSID Case No. ARB/08/12):arbitrary, discriminatory and unlawful expropriation( Investment Treaty News) 12

13 Convertibility EBRD Gas prices Marubeni interview,2010 Not yet big cases revealed. During NHC Uzbekneftegaz started implementation of 29 investment projects with total cost 14,4 bln.USD and preparing 23 projects with total cost around 7,1 bln.USD. Monitoring of implementation of contracts is indispensable. 13

14 A breach of contractual commitment by a host State may weaken the investor`s confidence in the reliability of that State. As a result, breach of contractual commitment may bring a reputational cost for the host State in future dealings, not only with the companies aggrieved by a breach of promise but also in dealings with all other companies that are aware of the breach.(Abdullah Al Faruque) The legal system having the ability to predict and to compete in a market economy is a basic requirement of long-term investment.(Abdullah Al Faruque) 14

15 Studying energy regulation and investment climate of CIS & Problem identification Analyzing related case law in Public International Law and applying to the problems of energy regulation and investment climate of CIS Summarizing possible impact of case law to CIS energy field and give detail policy options and suggestions for enhancement for CIS energy field regulation. 15

16 Comparative Case study Legal interpretation 16

17 Priscilla M.F.LEUNG, Guiguo WANG, State Contracts in the Globalized World, The Journal of World Investment and Trade, Volume7, December 2006,Number 6 International conference materials, Investment opportunities for Japanese partners, 2010,April 22 Tokyo A.A.Konoplyanik, Financing the Russian Oil and Gas Sector-The Effects of International Law Instruments, Abdullah Al Faruque, The Rationale and Instrumentalities for Stability in Long-term State Contracts :The context for Petroleum Contracts, The Journal of World Investment and Trade Oscar M. Garibaldi, Expropriation of Energy Investments, The International Energy Review (May 2007), Co-Author Investment Policy monitor, UNCTAD,2009 Natural resources, EBRD report, 2001 F. Robert Buchanan and Syed Tariq Anwar: Resource Nationalism and the Changing Business Model for Global Oil, The Journal of World Investment and Trade, Volume 10 April 2009,Number 2 17


19 Thank you for your kind attention. Questions and comments are welcome. 19

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