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• The policies and procedures related to the submitter's operations and supply chain in Myanmar; • Arrangements with security service providers; and • An acknowledgement that the Public Report will be made public, and that the submitter has redacted any information it considers exempt under FOIA. 32 In addition to providing the foregoing information, where the investment is for (i) the purchase of real property or the lease of any rights related to real property (which could be interpreted to include an oil and gas interest) for more than $500,000 or (ii) the purchase or lease of more than 30 acres of real property, then additional information must be submitted, principally relating to the dislocation or resettlement of citizens caused by the investment. 33 Finally, details of all payments to each governmental (national or local) entity of Myanmar or subnational or administrative entity asserting authority over the submitter’s new investment activities in Myanmar must be reported. Each relevant payment must be reported by payment type, including royalties, tax obligations, and fees. Aggregate annual payments to a particular governmental entity below $10,000 do not need to be reported. 34 Government report For the Government Report, the investor will need to include all the information provided in the Public Report except for the public disclosure acknowledgement. There are additional reporting requirements, including whether the submitter has had meetings or other communications with the armed forces of Myanmar or other armed groups that are material to the submitter’s investment in Myanmar, as well as details of such communications. 35 Conclusion Relaxing the sanctions on new investment in Myanmar, particularly in the oil and gas sector, has been long awaited by the U.S. petroleum industry and the international petroleum industry at large. MOGE claims Myanmar has approximately 215 million barrels of proved oil reserves, split evenly between onshore and offshore, and more than 15 trillion cubic feet of proved natural gas, nearly all of which lies offshore. 36 In contrast, the U.S. Energy Information Administration places proved oil reserves at 50 million Eased Sanctions Widen Doorway to Myanmar Oil and Gas Sector barrels and proved gas reserves at 10 trillion cubic feet. 37 According to MOGE, there currently are 12 foreign-operated onshore blocks and 29 foreign-operated offshore blocks. 38 With one exception, the foreign operators are all Asian entities. Total, the one exception, operates the large Yadana gas field, in which Chevron is a non-operating participating owner, and the related pipeline that transports natural gas to the Myanmar–Thailand border. Chevron is the only U.S. company with oil and gas interests in Myanmar, which were grandfathered by Executive Order No. 13047. Whether the authorization granted in GL-17 is the dawn of a new era of foreign investment in Myanmar’s energy resources will likely be first tested by the industry’s participation in the next round of bidding for open blocks. There was broad speculation that the Ministry of Energy would announce an auction for 20 or more offshore and onshore blocks at an oil and gas industry conference held in Yangon in early September. However, according to numerous press reports, the Ministry was requested by interested international oil companies to postpone the auction until stronger measures regarding transparency as well as environmental, social and biodiversity impacts were in place. 39 Speculation is that the next round will occur before year-end. The last licensing round was in 2011, which resulted in an award of contracts on nine out of 18 onshore blocks. 40 As the postponement of the recent auction suggests, GL-17 is only one piece of the Myanmar petroleum puzzle. Numerous other practical and legal reforms are required before most U.S.based and other international oil companies are likely to be comfortable with making significant investments in Myanmar. In addition to the transparency demanded by western companies, these measures include the establishment of essential infrastructure for business, as well as changes to the legal framework to support the fiscal regime underpinning oil and gas exploration and development and to ensure that foreign arbitral awards will be enforceable in Myanmar. And for U.S. persons, challenges to entering the market are still seen in the unavailability of political risk insurance through the Overseas Private Investment Corporation and the absence of a bilateral investment treaty between the U.S. and Myanmar. 41 Nevertheless, the relaxation of sanctions by GL-17 and the equivalent relaxation of trade sanctions by other countries should provide sufficient incentive and encouragement to enable the international petroleum industry to work with Myanmar to identify and exploit Myanmar’s full petroleum potential. 32 Part II of the Reporting Requirements. 33 Part II, paragraph 7 of the Reporting Requirements. 34 Part II, paragraph 8 of the Reporting Requirements. 35 Part II, paragraph 10 of the Reporting Requirements. 36 Id. 37 See http://www.eia.gov/countries/country-data.cfm?fips=BM&trk=p1. 38 Myanma Oil and Gas Enterprise dated July 2011 at http://www.energy.gov.mm/moge.pdf. 39 See e.g., Tun, A.H., “Myanmar Delays Energy Tender to Improve Transparency, Reuters(September 5, 2012) 40 Thu, M. “Government Calls for Offshore Block Investment,” The Myanmar Times (May 28–June 3, 2012). 41 Myanmar has investment treaties with China, India, Laos, the Philippines, Thailand, and Vietnam; of these, the treaties with China, India, the Philippines and Thailand are in force. See the UNCTAD Database of Bilateral Investment Treaties provided by the United Nations Conference on Trade and Development, available at http://www.unctadxi.org/templates/DocSearch.aspx?id=779. SEPTEMBER 2012 • 29
EDUCATION Journal of World energy Law & Business September 2012 - Login to www.aipn.org and click on the Journal link to access the full articles Energy, economy and other global challenges James A. Baker III James A. Baker III is an American attorney, politician and political advisor. He was Secretary of State under George H W Bush. This article is the unedited text of a speech delivered by James A. Baker III at the <strong>AIPN</strong> Spring Conference in Washington D.C. on 19 April 2012. Lex Petrolea and the internationalization of petroleum agreements: focus on Host Government Contracts Kim Talus, Scott Looper and Steven Otillar This article focuses on two separate but interrelated themes and discussions: Lex Petrolea and the standardization of international petroleum agreements. Both themes relate to the same phenomena: the internationalization of various legal and contractual aspects of the petroleum industry. How France shares the nuclear rent: a presentation of the NOME Act Sylvain Bergès For many years the largest operators in Europe have been attempting unsuccessfully to enter into the French electricity market. Many of them have developed production facilities in order to compete with established operators (ie EDF and GDF Suez). To accelerate the opening of the French market and enable fair competition with EDF, the French government has now created a means of third-party access to nuclear power electricity. If the legal mechanism allowing such access is effective, it should create real competition in the French electricity market. Foreign direct investment mechanisms and review of Iran’s buy-back contracts: how far has Iran gone and how far may it go? Maximilian Kuhn and Mohammadjavad Jannatifar For political reasons, Iran’s role in global energy politics is constantly declining as three decades of internal divisions, coupled with crippling international sanctions, have left Iran unable to capitalize on its vast energy potential. However, once these political issues have been resolved one way or the other, SEPTEMBER 2012 • 30 the second most important issue will remain: the direct investment mechanism for foreign investment into the Iranian energy sector—the buy-back contracts. This article sheds light on Iranian concessions, contracts and other forms of investment developed, and analyses their legal basis. We review the objectives of the buy-back concept and provide a historical perspective of its development. We advocate a fundamental change of the investment climate by providing incentives (financial, economical, tax) and amending the buy-back formula through a ‘new method’ to attract local and foreign investment. The new legal framework for oil and gas activities near the maritime boundaries between Mexico and the U.S: comments on the Agreement between the United Mexican States and the United States of America concerning transboundary hydrocarbon reservoirs in the Gulf of Mexico José Luis Herrera Vaca On 20 February 2012, the U.S. and Mexico signed the Agreement between the United Mexican States and the United States of America Concerning Transboundary Hydrocarbon Reservoirs in the Gulf of Mexico (the ‘Agreement’).1 This Agreement—while not in force yet2—is the first serious governmental attempt3 to establish a set of rules governing the exploitation of oil and gas reservoirs in what both countries see as a real possibility in the Gulf of Mexico: shared deposits. The Agreement provides for the joint, efficient and equitable exploitation of such reservoirs.4 This article outlines the main features of the exploitation of transboundary hydrocarbon reservoirs provided for in the Agreement, new possibilities for cooperation and business development between oil and gas companies5 along the maritime boundaries whether or not transboundary hydrocarbon reservoirs are in place and whether companies really need these provisions, or whether exploration of shared deposits could successfully take place without the Agreement. Colombia’s regulatory and fiscal hydrocarbons regime: explaining Colombia’s success and the challenges ahead Carlos Bellorin Nuñez This article deals with Colombia’s current fiscal and contractual petroleum regime and how solid institutions have played a role in the country’s success in increasing its oil production in a
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