Stabilization Clauses in the Kurdistan Regional Government’s Petroleum Contracts
DOI:
https://doi.org/10.21271/zjlp.24.42.2Keywords:
Production Sharing Contract, Kurdistan Regional Government KRG, Stabilization Clauses, Renegotiation ClausesAbstract
Petroleum contracts, including those signed by the Kurdistan Region Government (KRG), are typically long-term contracts that involve substantial economic, financial, and legal risks. Given the dynamic political and regulatory environment, it is expected that significant changes may occur during the life of these contracts. Shifts in the KRG’s policies, fiscal regimes, or legal frameworks can have significant impacts on International Petroleum Companies. To mitigate such risks, companies rely on contractual guarantees such as stabilization and renegotiation clauses, which aim to preserve the legal and economic equilibrium of the contract by limiting unilateral changes. This study adopts a qualitive approach to define and categorize stabilization clauses, and examine how these clauses are implemented in the KRG’s petroleum contracts? The findings suggest that both classic (freezing clauses) and modern (economic equilibrium clauses) approaches are employed. While the modern approach of the clauses gives power to the Kurdistan Region Government to modify its legal framework in the Contracts, however, it requires the consent of the contracting companies, thereby providing a degree of investment protection.
References
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