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New Producer Contract Terms And Uncertainty: Lessons From The Recent Past, Patrick R.P. Heller, Perrine Toledano, David Mihalyi, Tehtena Mebratu-Tsegaye

Columbia Center on Sustainable Investment Staff Publications

The petroleum industry is volatile, and governments in “new producer” countries have operated at a significant information disadvantage when negotiating with international oil companies. This challenge is growing today; new producer countries face intensifying questions around whether to offer fiscal incentives to maintain investment in the face of 1) the pandemic-induced volatility in oil prices and 2) long-term questions about the future of the industry in the face of the climate crisis and the global energy transition.

This confluence of short-term and long-term uncertainty is prompting a reexamination of the narrative that once took hold in many new producer countries. …