Contract Fiscal StabiilityToday 18:26
Without prejudice.
Not being privy to all the discussions going on re settlement of the PSC- and payments issues, I looked again at the contract to see what it says about it all and note that the PSC, signed by GKP, Texas Keystone, MOL and the KRG/MNR on 6th Nov-2007 included the following:
Article 43 – Governing Law, Fiscal Stability and Amendments
Governing Law
43.1 (Confirms contract to be governed by English Law)
Fiscal Stability
43.2 (Contractor obligations shall not be changed by government)
43.3 The GOVERNMENT guarantees to the C0NTRACTOR, for the entire duration of this Contract, that it will maintain the stability of the legal, fiscal and economic conditions of this Contract, as they result from this Contract and as they result from the laws and regulations in force on the date of signature of this Contract. The CONTRACTOR has entered into this Contract on the basis of the legal, fiscal and economic framework prevailing at the Effective Date. If, at any time after the Effective Date, there is any change in the legal, fiscal and/or economic framework under the Kurdistan Region Law or other Law applicable in or to the Kurdistan Region which detrimentally affects the CONTRACTOR, the CONTRACTOR Entities or any other Person entitled to benefits under this Contract, the terms and conditions of the Contract shall be altered so as to restore the CONTRACTOR, the CONTRACTOR Entities and any other Person entitled to benefits under this Contract to the same overall economic position (taking into account home country taxes) as that which such person would have been in, had no such change in the legal, fiscal and/or economic framework occurred.
43.4 (Defines procedures to be adopted should the contractor believe its benefits have been detrimentally affected by any changes)
Not being a Commercial Lawyer, I am unable to determine the weight and watertightness of Article 43.3 and would welcome the thoughts of others.
If completely watertight, does the company have a problem with the KRG’s willingness or ability to pay its dues?
If so, does this problem take precedence over the CGI issue of commercial returns (CO + PO) from the contract?
In a nutshell, Is Erbil the main problem or is it Baghdad?