Page 19: of Offshore Engineer Magazine (Oct/Nov 2013)

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Analysis

Corporate foreign policy

Developing economies continue to be a core feature of global exploration eforts.

Dr. Peter Davis looks at managing political, societal and ethical risks in such regions.

s Dick Cheney once observed, government is stable, and legal, other ethnicity and religion, also pose chal- “the good Lord didn’t see structures may not be in place. lenges. What are the relationships and ft to put oil and gas only Regulatory frameworks will often be tensions between different groups? Is it

A where there are democratically elected challenging; in the Democratic Republic possible to operate to international stan- regimes friendly to the United States.” of Congo (DRC), for example, mining dards in relation to health and safety?

As extractive companies increasingly regulations are virtually non-existent. Is corruption a concern, and if so fnd themselves exploring business Similarly, rule of law may be weak, and how can an investor avoid activities opportunities in—to quote Dick again— so contracts and other legal frameworks that may, for example, lead to prosecu- “places where, all things considered, may not be enforceable in practice. tion under the US Foreign Corrupt one would not normally choose to go,” Getting these issues wrong can be Practices Act? Do local norms disad- they fnd themselves facing a raft of very costly. First Quantum owned the vantage women, specifc ethnic groups, new and unfamiliar challenges. Kolwezi copper and cobalt tailings or other elements of society?

Most obvious is political stabil- project in south-eastern DRC. The Finally, companies have to deal ity—quite simply, is the person or company had spent a reported US$430 with problems associated with infra- government with whom a deal was million preparing the commercial pro- structure. Transport links can often be transacted likely to remain in place? duction. In early 2010, the company’s poor or non-existent, outside major

If not, is a likely successor minister or licence was revoked for rather murky urban centres, and power supplies can government likely to honor the deals political reasons. be erratic. “Soft” infrastructure will already in place? However, even if a A country’s ethical and social norms, frequently be problematic—in many

BP and Statoil review

Statoil has established a security risk must be strengthened to respond to the

Algerian security management system, but, it says: “The security risks associated with operations in

Dealing security risk, even in more devel- company’s overall capabilities and culture volatile and complex environments.” oped countries, was brought into stark light following the January 16 attack on the

BP/Statoil operated In Amenas gas plant in Algeria.

Forty people were killed in the attack.

Statoil, fve of whose workers were among the dead, said in a report, published in

September, neither it nor BP could have prevented the attack, but questioned both frms’ reliance on Algerian military protec- tion, which had not detected or prevented the incident.

It also said security measures at the site were not constructed to withstand or delay

Photo: Øyvind Hagen - Statoil an attack of the scale that occurred. oedigital.com October 2013 | OE 21

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