Legislative frameworks used to fosterpetroleum development

The main purpose of a legislative framework for petroleum development is to provide the basic context for, and the rules governing, petroleum operations in the host country; to regulate them, as they are carried out by domestic foreign, and international enterprises; and to define the principal administrative, economic and fiscal guidelines for investment activity in the sector. Experience shows that the cornerstone of effective petroleum legislative frameworks for exploration and production operations is a broad, generic, short but thorough petroleum law (not overdetailed), complemented by enabling regulations and one or several variants of a model contract. Such frameworks give both the host country and international oil company investors a clear legal and contractual context in which to negotiate mutually advantageous exploration and production arrangements that develop the host state's petroleum resources. The fiscal and tax aspects of the framework may be detailed in the petroleum law or in a separate petroleum revenue code, either of which would complete the legislative package. The author identifies and details the essential elements of such a framework -- petroleum law, regulations, and model contracts -- and explains how these three components relate to one another.