Managing the Risk of Sanctions in the Global Oil & Gas Industry: Corporate Response under Political, Legal and Commerical Pressures

By Walde, Thomas W. | Texas International Law Journal, Winter 2001 | Go to article overview

Managing the Risk of Sanctions in the Global Oil & Gas Industry: Corporate Response under Political, Legal and Commerical Pressures


Walde, Thomas W., Texas International Law Journal


THOMAS W. WALDE^

Two years ago the English opened up the trade, which they still continue, to the Levant, which is extremely profitable to them, as they take great quantities of tin and lead thither, which the Turk buys of them almost for its weight in gold, the tin being vitally necessary for the casting of guns and the lead for purposes of war. It is of double importance to the Turk now, in consequence of the excommunication pronounced ipso facto by the Pope upon any person who provides or sells to infidels such materials as these.1

I. INTRODUCTION: WHAT ARE ECONOMIC SANCTIONS ABOUT-WHY Do THEY CONCERN THE INTERNATIONAL OIL & GAS INDUSTRY?

Since its origin in the nineteenth century, the international petroleum industry has operated, and learnt to operate, in often highly politically charged environments. The competence in identifying, assessing, and managing such political risk has always been-- and is likely to be in the future-an essential factor of corporate and managerial competitiveness in this industry. Political risk reflects the exposure of the technical and business approach to the industry to the often much more volatile, less forecastable, and less manageable events in the "political" sphere-as contrasted to the supposedly more "rational" sphere of commercial decision-making. Politics sometimes specifically targets and hits the petroleum industry not only due to its strategic character, large capital investment, and public visibility, but also because the industry's global nature, imbued with "foreign" elements resented in nation states, makes it a very suitable target. But politics can also hit the petroleum industry rather accidentally, in particular when this industry is in the way of conflicts between states, between conflicting ideologies, or within a country, between ethnic groups or classes that hate each other. Political risk shows up in many faces. As national and global politics evolve, old faces may reappear and new faces are certain to emerge. The political risk of the 1960s and 1970s was nationalisation in all its forms;2 instability of the legal and fiscal framework, high transaction cost, and the weak force of the institutions of law are key facets of political risk in the former Communist countries.3 These are the two faces of political risk originating from "weak" participants in the international economy. But there are also significant political risks created in the developed economies, including environmental regulation, both in substance and as a pretext for domestic protectionism,4 and economic sanctions. Economic sanctions, as a form of political risk of current and possibly growing significance, that originate in the developed world and in particular in the United States, is the topic of this paper.

A lot has been written on economic sanctions.5 I will not repeat all of the interesting analyses and concepts already published, but rather select such information, intelligence, and concepts that are of particular relevance to the international petroleum industry. I am particularly interested in the techniques of managing the political risk of sanctions: forecasting and anticipatory measures; management of specific sanctions before, when, and after they arise; and strategies of political lobbying, of compliance, and of avoidance of sanctions. While the literature is extensive on the formal foreign policy aspects of sanctions, very little is known on the corporate response: How do companies react to sanctions-and how should they? Issues of the legal-and ethical-boundaries of primarily commercially motivated corporate behaviour arise here. What is the impact of lobbying on the U.S. Congress (where most sanctions originate), both with respect to legislative action and implementation of the often discretionary and open-ended rules? What is the impact of economic sanctions on competition in the petroleum industry: Who suffers and who benefits? What is the competitive impact of sanctions and can one explain the expansion of U. …

The rest of this article is only available to active members of Questia

Sign up now for a free, 1-day trial and receive full access to:

  • Questia's entire collection
  • Automatic bibliography creation
  • More helpful research tools like notes, citations, and highlights
  • Ad-free environment

Already a member? Log in now.

Notes for this article

Add a new note
If you are trying to select text to create highlights or citations, remember that you must now click or tap on the first word, and then click or tap on the last word.
One moment ...
Default project is now your active project.
Project items

Items saved from this article

This article has been saved
Highlights (0)
Some of your highlights are legacy items.

Highlights saved before July 30, 2012 will not be displayed on their respective source pages.

You can easily re-create the highlights by opening the book page or article, selecting the text, and clicking “Highlight.”

Citations (0)
Some of your citations are legacy items.

Any citation created before July 30, 2012 will labeled as a “Cited page.” New citations will be saved as cited passages, pages or articles.

We also added the ability to view new citations from your projects or the book or article where you created them.

Notes (0)
Bookmarks (0)

You have no saved items from this article

Project items include:
  • Saved book/article
  • Highlights
  • Quotes/citations
  • Notes
  • Bookmarks
Notes
Cite this article

Cited article

Style
Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

(Einhorn, 1992, p. 25)

(Einhorn 25)

1

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Cited article

Managing the Risk of Sanctions in the Global Oil & Gas Industry: Corporate Response under Political, Legal and Commerical Pressures
Settings

Settings

Typeface
Text size Smaller Larger Reset View mode
Search within

Search within this article

Look up

Look up a word

  • Dictionary
  • Thesaurus
Please submit a word or phrase above.
Print this page

Print this page

Why can't I print more than one page at a time?

Full screen

matching results for page

Cited passage

Style
Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn, 1992, p. 25).

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn 25)

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences."1

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Cited passage

Thanks for trying Questia!

Please continue trying out our research tools, but please note, full functionality is available only to our active members.

Your work will be lost once you leave this Web page.

For full access in an ad-free environment, sign up now for a FREE, 1-day trial.

Already a member? Log in now.