Analysis: Arab Spring Likely to Leave Oil Firms Unscathed

June 23, 2011 by · Leave a Comment 

By Tom Bergin

2011-06-15T172504Z_01_BTRE75E1CDW00_RTROPTP_3_INTERNATIONAL-US-TUNISIA-TOURISM

A Tunisian artisan makes tributes to the “Arab Spring” revolution by etching flags on bronze plates in the medina, the old city of Tunis, June 14, 2011.

REUTERS/Zoubeir Souissi

LONDON (Reuters) – Western oil firms are unlikely to face widespread asset seizures or contract revisions as a result of Arab uprisings, thanks to deft diplomacy, legal protections and efforts to depict themselves as partners of the local citizenry.

In the past, big political shifts in the Middle East have often been followed by the eviction of foreign oil producers — Muammar Gaddafi in Libya, Saddam Hussein in Iraq and Ayatollah Khomeini in Iran to cite a few examples.

This time around, upheaval has hit Libya, Egypt, Yemen, Tunisia and Syria — not the biggest oil producers in the Arab world but among the most open to foreign investment. Companies including BP Plc, Exxon Mobil and Royal Dutch Shell have spent billions there.

“I wouldn’t describe us as worried. We’re being vigilant,” said Bob Dudley, chief executive of BP, echoing comments from other companies.

The new governments that have emerged, or may emerge, are expected by and large to remain supportive of foreign investment, because they will wish to maintain output and government revenues.
“I don’t see there being a large nationalistic wave,” said Richard Quin, Middle East analyst at Wood Mackenzie.

In the past popular anger toward a regime has spilled over to the companies that supported it, but oil companies say that over the past two decades, they have positioned themselves on the side of communities, rather than as agents of government.

“Companies now are not so closely aligned with governments,” said Mahdi Sajjad, president of Syria-focused Gulfsands Petroleum, whose shares have been hit by investor fears about the unrest.
In part this has been achieved by investing in community engagement projects. Oil contracts that are more transparent and more favorable toward host nations also play a big role.

Contract Changes

Up to the 1970s, oil contracts were opaque and seen as beneficial to companies and the region’s frequently corrupt governments — at the expense of citizens. Now contracts usually follow internationally accepted models.

This will help oil executives argue they are giving host nations the best deal that a new leadership could hope to get and, therefore, that existing contracts should be respected.
“We look at it (investment) from a perspective of the fundamental stakeholders, the population of the country .. rather than through the lens of the current incumbent government,” said Frank Chapman, chief executive of British Gas producer BG Group.

“What we are doing in Tunisia and Egypt is sustainable,” he added.

Oil companies have beaten a path to new leaders in Egypt and Tunisia, and, an Italian ministerial source told Reuters last month, even to Libyan rebel leaders. Companies say the signals received so far do not point to widespread asset seizures.

If new governments do seek to expropriate oil fields or to rewrite contracts, companies will find they have greater legal protection than they did when the last wave of nationalization swept through the Arab world in the 1970s.

Modern contracts bar governments from taking unilateral action to seize assets and can limit their ability to hike taxes. And if there is a dispute over whether the government has overstepped its authority, companies don’t have to worry about arguing their cases in front of potentially biased local courts.

“Contracts usually provide for arbitration in a neutral venue,” Anthony Sinclair, a partner with law firm Allen & Overy said.

Potential for Loss Still

In addition, many countries have signed bilateral investment treaties, known as BITs, which commit them to protect foreign investments in their territories.
“There are close to 3,000 of these treaties in existence,” Sinclair said.

These will help deter unilateral moves against companies, but they will not protect companies against all losses. International litigation can drag on for decades, during which opportunities are lost, said Harry Clark, partner at Dewey & LeBoeuf. This suggests companies might agree to unfavorable contract changes that would not be upheld in court.

Also oil companies can face a big financial hit if instability delays production.

“The oil industry values everything in net present value terms … (and) because you are pushing things out, on a discounted cash flow basis, that will erode value,” said Quin.
BP and other companies have suspended operations in Libya, while French oil major Total said it lost production at one field in Yemen due to the conflict there.
Sajjad said Gulfsands’ operations in Syria were unaffected, but the conflict could create difficulties in importing equipment there and in other countries — especially if new sanctions are imposed against governments fighting revolts.

There is little companies can do to limit such losses.

Yet some executives say the problems thrown up by the Arab Spring simply reflect the intrinsic nature of the oil business.

“It is always like that in exploration, you can always face different kinds of issues .. This is part of life for an oil and gas company,” said Total head of strategy Jean-Jacques Mosconi.

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Christian Scholar: Was Jesus a Muslim?

November 2, 2009 by · 1 Comment 

By Adil James, MMNS

PA248508 Warren–October 24–Jesus’ being Muslim is a foundational belief of Islam, but not for Christians.  All of the prophets were teachers of the one true religion, although each taught different aspects of it.  But for Christians to think that Jesus (as) is Muslim is a very radical idea.

So true is this that the author and professor Robert F. Shedinger faced, predictably, some opposition when he published his book with the name Was Jesus a Muslim.

The author spoke about his book this past Saturday at the IONA mosque in Warren.

The essence of Mr. Shedinger’s argument is that Islam is not a religion but rather a system of pursuing social justice.  He argued that actually the reason non-Muslims call it a religion is in order to classify it in a way that has no relevance to social justice–in order to exclude religious people from involvement in controversies in the public square.

The underlying purpose of Western attempts to classify Islam as a religion, he argues, is to subvert the religious organizing principle and preempt a religious backlash against attempts to dominate or colonize a culture.

In fact, while it may sound offensive to think that Islam is not a religion, the professor couched this argument in very complimentary terms, arguing that in fact the idea of a religion being just a religion is a particularly Western concept that would have been foreign even to early Christians, let alone to the other peoples of the world and the other religions of the world.

Perhaps another way to state this argument would be to say that Islam is a complete system of life, not just a devotional practice restricted to certain days.
In accordance with his argument that Islam is not a religion, he argues that Christianity is also analogously not a religion, and he argues that Jesus (as) was in a sense a revolutionary and politically dynamic person, therefore not “just” a religious figure.

Shedinger argues that diverse Muslim scholars such as Iran’s Ayatollah Khomeini and South Africa’s Fareed Ishaq have argued along similar lines that Islam should not be separated from social justice.  Shedinger quoted Tariq Ramadan also and his frequent calls to political justice of various sorts.

A different view might be that Islam is a religion the practice of which should be divorced from politics, except that it is a complete religion with implications in every avenue of life, including leadership.  Beyond this, Jesus (as) was actually Muslim in submission to God’s will, who will be Muslim when he returns.

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