Animal Farm Posted May 27, 2006 Oil and gas lawyer extends reach beyond borders Macleod Dixon's Jay Park has put together deals in Mexico, Vietnam and Africa, writes JACQUIE McNISH JACQUIE McNISH Wednesday, May 10, 2006 Far away from the Somali government's shaky temporary base, Baidoa, a place so devastated by war and famine it is called "city of death," a dozen advisers met in a Jakarta penthouse two weeks ago to draft a legal rescue mission for the African country's vast and unexplored oil and gas basin. Advisers to Somalia's President Abdullahi Usuf Ahmed convened the meeting in the distant Indonesian city because government offices in Baidoa are still being converted out of a former food warehouse. The African country had to go even farther to find legal experts for the session. Flown in from Calgary to lead the extraordinary gathering was Jay Park, a partner with Macleod Dixon LLP, who is ranked among the world's top oil and gas lawyers. Mr. Park and his partner Thomas Valentine have been hired by Somalia's fledgling government to design a credible petroleum regime that can attract investors to the war-torn, but oil-rich region. If all goes according to plan, the new laws will be in place next summer. "This is one of the poorest countries in the world, but it may be sitting on some of the greatest oil and gas treasures. We need to ensure that Somalia can take advantage of its resources without succumbing to the resource curse of corruption, conflict and violence," Mr. Park said last week in his Calgary office. If anyone can navigate the politically tricky challenge of drafting laws to attract international investors without sparking political controversy in a country that has seen 13 governments fail in 15 years, it is Mr. Park. A partner with Canada's most internationally minded law firm, Mr. Park has worked with aid agencies, governments and financial advisers in about 30 countries to help them build a legal framework to claim a bigger share of the profits from orbiting oil prices. "The changing price of oil is making a lot of governments question whether they are getting enough of the pie. The challenge is to help them find a balance between what they should get and what investors need to justify spending money on the projects," Mr. Park said. It is not an easy balancing act. In Venezuela, political opposition to foreign oil and gas companies was so intense that President Hugo Chavez recently rewrote the country's laws and forced offshore companies, which had invested billions of dollars in local projects, to yield control stakes in their operations to the government. Other countries aren't pursuing such harsh measures, but they are certainly demanding more from the world's big oil companies. In the old days, developing nations were so starved for cash that they were content to accept fixed payments or royalties in exchange for handing oil and gas rights to foreigners. But after watching foreigners pocket most of the profits from soaring petroleum prices, many states are abandoning these so-called "concession systems" and replacing them with "production sharing," "joint venture" or "service contract" systems that give more control and profits to local governments. Countries such as Somalia, Pakistan and Vietnam have hired Mr. Park to help them build modern petroleum laws, investment contracts and regulatory systems from scratch. In these far-flung frontiers, Mr. Park has landed in some strange corners. Once he and a group of advisers touring Pakistan stumbled over an illegal weapons operation along its northern border. In Vietnam, he ran up against local political forces that resisted a number of the changes he proposed for an open and equitable tendering system for oil and gas projects. In each country Mr. Park's biggest challenge is to craft laws that reassure foreign investors without triggering a political backlash. It can be a difficult assignment. For example, when Mr. Park was hired by Mexico in 2002 to help draft contracts with a handful of foreign oil companies willing to develop the country's northern gas reserves, controversy over the project generated front-page stories for months. To placate opponents, Mr. Park drafted complex contracts that put in place a sliding scale of about 200 payments that are paid to investors when certain conditions, such as drilling wells or laying pipe, are fulfilled. The contracts were challenged in eight different lawsuits from local labour and political groups, but each was defeated. The most curious thing about Mr. Park's international oil and gas practice is that he is doing it at all. Most top Calgary oil and gas lawyers are so busy crafting takeovers, contracts and asset sales during the heady oil boom that they barely have time to take a vacation, let alone develop international clients. Ten years ago, Mr. Park began looking for new clients outside the country as part of a broader strategy adopted by Macleod Dixon to expand its core oil practice and keep up with the international ambitions of its corporate clients. Today, about 70 of the firm's 253 lawyers are working in Moscow, Kazakhstan, Venezuela and Brazil. Competitors grumble that profits have been volatile at the legal outposts, but Paul Drager, a former Canadian diplomat and architect of the firm's expansion, retorts "they don't get it." Macleod Dixon's future, Mr. Drager said, hinges on pushing the firm's reach outside of Alberta. "We deal in an industry that is international. You can't just stay within your borders." jmcnish@globeandmail.com Quote Share this post Link to post Share on other sites
raadamiir Posted May 27, 2006 This is great news. :cool: Quote Share this post Link to post Share on other sites
