Natural Resources and Violent Conflict - WaterWiki.net

310 john brayExplorationExploration involves several substages. The first takes place outside thecountry: the company undertakes a desktop review of all publicly availablegeological information to assess whether exploration is even worthconsidering. The next stage is to obtain an exploration license and carryout an initial geological survey. Initially, this may involve minimal disturbance—muchof the information can be obtained through surveysfrom the air. Later on, the exploration teams may want to drill exploratoryholes or to undertake seismic testing. By this point, the presenceof the exploration team is highly visible in country.The national government administers exploration licenses, and regionaland local administrations may require further permits. Companieslook to the government to ensure a safe operating environment,while taking responsibility for day-to-day security.Exploration carries significant costs, particularly when it comes todrilling or seismic work, but these are much lower than the costs ofdevelopment or operations. The financial stakes are higher for juniors,which are likely to have a limited number of projects in their portfolioand are more dependent on the success or failure of independentventures.Majors have a broader spread of assets. They expect no more than alimited number of explorations to lead to commercial discoveries. Theycan therefore more readily afford to abandon exploration venturesthat, although somewhat promising, fall short of their requirements. Atthis stage, they have fewer financial hostages. Petroleum and miningcompanies, however, emphasize that relatively few explorations lead tocommercial discoveries. At this stage, their prime concern is with geologyrather than politics.Their second concern is with physical safety. By the nature of theirwork, exploration teams need to travel to remote areas, often carryingexpensive equipment. It may not be safe or practical to operate in regionsthat are affected by insurgency or political unrest. Smaller juniorcompanies are often prepared to take greater risks than the majors.For most companies, politics and social issues come third. Particularlyamong juniors, the prevailing view is “Let’s deal with the geologyfirst. The politics and the legal framework can come later—if we findanything.” The majors tend to be more stringent. Some refuse even toenter countries with a reputation for high levels of corruption orpolitical instability. The larger companies typically commission politicalrisk assessments before they enter a country for the first time. Country-levelpolitical risk analysis is available through published sources orby subscription, for example, from the Economist Intelligence Unit,Political Risks Services, or Control Risks Group.