Assignment Title/Question : Critically evaluate the concept of “relative bargaining power” in the contractual relationship between host-governments and international oil companies in the early
stages of an E&P contract.
You must support your answer with relevant and appropriate examples.
General Guidance/Structure :-
You are required to develop a well presented and logically structured essay on the concept of ‘relative bargaining power’.
Basically you are evaluating the respective parties (Host States and IOC’s) bargaining powers and how the pre-contractual negotiations subsequently translate into a full blown E & P contract.
Evaluate which party has more bargaining power and why is this so? Look at the following issues :-
(1) The asymmetry of information in the hands of the IOCs
(2) Their technical expertise, and
(3) They are financing the project development.
Compare this with concession agreements – how do these differ? Also look at royalty payments and returns, and see how these payments and returns affect the relative bargaining power of the
You should aim to develop a number of competing arguments on the dynamics of the relationship between the host-governments and IOCs.
You are to provide a balanced view of the issues involved and whether contractual relationships are sustainable in the long-term in oil producing countries without strong legal frameworks for
A good structure and a coherent analysis which is supported with evidence is essential.