Introduction
This Column touched earlier on what the Model Petroleum Contract describes as a Stability Clause, the objective of which is to provide assurance to international oil companies that they will be protected from any variation in fiscal or economic policies by governments for a period of as much as thirty years. Here is how the Model Agreement describes that clause:
“Government shall not, following the Effective Date, unilaterally increase the contractual obligations of the contractor under this Agreement or diminish the contractual rights of the Contractor hereunder as such obligations and rights exist as of the Effective Date.
“If any level of government, promulgates new or amended laws, decrees or regulations, which negatively impacts the contractor’s economic benefits, the Parties shall promptly make revisions and adjustments to this Agreement as necessary to maintain the contractor’s economic entitlements at the level existing as of the effective date.”
