“The extent of contractual relationship between host governments and international oil companies, is unfortunately, not very clear so as to spell out, exactly who has the ‘edge’ in terms of bargaining power in an E & P
Examine and evaluate the concept of ‘relative bargaining power’ as in the above statement.
You must support your answer with relevant and appropriate examples.
Total Marks for Assignment: 100
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Indicative Content (Students will not see this)
Students are required to develop a well presented and logically structured essay on the concept of ‘relative bargaining power’ between HG and IOC. Knowledge and Understanding [worth 40% of marks]
Basically students are evaluating the respective parties (Host States and IOC’s) bargaining powers and how the pre-contractual negotiations subsequently translate into a full blown E & P contract. Evaluate which party has more bargaining power and why is this so?
Look at the following issues :-
(1) The asymmetry of information in the hands of the IOCs
(2) Their technical expertise, and
(3) They are financing the project development.
Compare this with concession agreements – how do these differ? Also look at royalty payments and returns, and see how these payments and returns affect the relative bargaining power of the parties.
Graduate Skills [worth 25% of marks]
A good structure and a coherent analysis which is supported with evidence is
Harvard style referencing and Bibliography.
Intellectual and Cognitive Skills [worth 35% of marks]
Students should aim to develop a number of competing arguments on the dynamics of the relationship between the host-governments and IOCs. Students are to provide a balanced view of the issues involved and whether contractual relationships are sustainable in the long-term in oil producing countries without strong legal frameworks for enforcing contracts.