The following article was published in Petroleum Review’s February issue and has been reproduced with the permission of the Energy Institute.
No one could ever say the oil business was boring. From weather patterns to price swings to social unrest, not a day goes by without a new risk to be assessed and managed by operators in the extractive industries.
Unfortunately, however, one of the biggest risks to the oil sector is showing no signs of dissipating: resource nationalism.
As the world’s key energy commodity, oil has long been the focus of government intervention, while strong demand from industrialising emerging economies is creating new risks of expropriation and disruption.
According a recent report released by the U.K. think tank Chatham House, the balance of power between the private sector and host governments is shifting as sustained high commodity prices have lead to a series of state interventions, expropriations, and aggressive tax regimes. These new government players and state-owned entities are playing under a new set of rules, sometimes acting above the law.