Commodities | Dec 15 2006
By Rudi Filapek-Vandyck
Iraq doesn’t receive any mentioning, but the Australian Government’s export credit agency has nevertheless rung alarm bells about the global trend of turning resources into the focal point of political nationalism. No Australian companies have been affected as such, but the agency clearly sees “a growing issue for mining and petroleum companies working in emerging economies”.
Think South America where a swing to the political left is fueling moves to nationalise energy and resources industries. Think Russia where only this week Royal Dutch/Shell decided to abandon its once highly promising Sakhalin oil project.
For those with their eyes open the list of recent incidents is already quite impressive. The Export Finance and Insurance Corporation, or EFIC as the agency is called, reports the trend seems specifically apparent in Africa and the Middle East with authorities in Kuwait, Algeria, Dubai and Qatar all moving either to harden fiscal and contract terms for international oil companies or to restrict access to local acreage.
In countries such as Uzbekistan and Kyrgyzstan international mining companies are facing governments’ de-facto expropriations by imposing back taxes and initiating bankruptcy proceedings, says EFIC.
The agency also suggests that, specifically for oil and gas, the trend is pushing the playing field in favour of less profit-driven national oil companies from countries like China, India and Malaysia. As countries such as Angola, Ecuador and Sudan have expressed the intention of joining OPEC this leaves oil producers in those countries vulnerable to the prospect of having their production controlled by OPEC quotas in the future.
As said before, Australian companies have thus far not reported one “casualty”, but says EFIC, with many junior and major Australian companies active in the Middle East and North Africa, this is set to change.