Emissions trading scheme and gas flaring in the United Kingdom Continental Shelf: a comment, International Energy Law Review
Date: 2011
By: Tade Oyewunmi

The concept of an emission trading scheme originated in economics, depicting pollution as a factor of production and by turning it into well-defined, transferable legal right(s), the market, as opposed to the government, can properly regulate pollution. Hence, emissions’ trading is seen as a profit-centre, which does not by itself reduce emissions, but makes it profitable to do so.
The United Kingdom's Emissions Trading Scheme has its roots in the European Union Emissions Trading Scheme and the flexible market-mechanisms of the 1997 Kyoto Protocol, which are essentially anchored on the effectiveness of the "cap and trade system". The system and the scheme have had their criticisms, especially with regard to their capacity to actually regulate atmospheric pollution, gas flaring and reduce greenhouse gas emissions. This article examines the scheme and its system. It concludes that the scheme cannot be said to be wholly effective. The Scheme and its “cap and trade” (including the gas Flare Transfer Pilot Trading Scheme) fundamentals are not wholly effective, because “environmental effectiveness” is sacrificed for “cost-effectiveness” and managerial freedom, thus making the goals of climate change ad environmental protection elusive. Carbon trading all by itself will not deliver all climate change policy objectives. 
Hence, other policy tools such as regulation, taxation and subsidies are definitely required to complement and support the objectives of carbon trading as part of a wider transition to a low carbon economy. Hence, as far as oil and gas operations on the UKCS are concerned, especially with respect to gas flare reductions, the ETS framework and agenda will require a perfect and healthy market, an effective and an up-to-date mix of regulations that deal with present and future exigencies of gas production and utilisation…


Stabilisation and Renegotiation Clauses in Production Sharing Contracts: Examining the Problems and Key Issues, The Oil, Gas & Energy Law Intelligence (OGEL) Journal,
Date: 2011
By: Tade Oyewunmi

OPEC’s Monthly Oil Market Report (May, 2011) depicts that the price of OPEC’s Reference Basket increased in April, 2011 by about $8.25 compared to March, 2011 and by $35.76 from a year earlier. The Nymex WTI and ICE Brent contracts also witnessed their highest prices and fluctuations since the global financial crisis of 2008. Oil producers like Nigeria are not just on the verge of a national petroleum industry ‘legal revolution’ in its quest to ensure maximum benefits accrue from oil and gas resource exploitation, but has overtime found herself in politically and economically unacceptable position as parties to Exploration and Production arrangements with investing Oil Companies. Russia, Venezuela, Bolivia e.t.c. have also been earmarked as producers that consistently engage in petroleum contract reviews and nationalisation to ensure petroleum arrangements yield maximum benefits for the State. Recent developments in the North Africa (e.g. Libya) and the Middle East also bring up key issues on contractual security and stability.

Following this background and coupled with the unique attributes of Production Sharing Contracts as the preferred option for arranging upstream petroleum operations. This paper examines the assertion that- there is no absolute ‘contractual security’ for contracting parties. It highlights the main problems and issues, especially in countries like Nigeria, submitting that contractual instruments like stabilization, renegotiation and adaptation clauses can at best guide and not freeze-up relationship and cooperation between parties. The tussle has always been between the countervailing and counterpart principles of 'pacta sunt servanda' and 'clausula rebus sic stantibus'. By and large, the contractual relationship is more important than the formal (contract) document itself and parties strive to let relationships survive based on the extent of their respective interests.…

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