Resource Nationalism, Expropriation and Risk Mitigation - Chapter 02 - Leading Practitioners’ Guide to International Oil & Gas Arbitration

Author(s):

Elisabeth Eljuri

Gustavo Mata

Page Count:

56 pages

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Published:

August, 2015

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I. INTRODUCTION

Resource nationalism is a state’s somewhat understandable desire

to make the most out of the natural resources located within its

territory. Some states accomplish this feat by implementing changes

to taxation or royalty regimes and restrictions on foreign investment.

However, other states adopt more aggressive approaches and decide

to expropriate the investments of foreign investors, or altogether

nationalize an entire sector of their economy. Evidently, resource

nationalism is most present in the energy sector, where investors face

the constant risk of being subject to resource nationalist policies

which might adversely affect the terms under which they initially

decided to make their investment. Expropriation, in its different

forms and shapes, is the most common manifestation of resource

nationalism, and as such, it will be thoroughly discussed in this paper.

II. RESOURCE NATIONALISM

Resource nationalism has been at the center of many ideological,

political and economic debates. As a result, it has become a

somewhat controversial term, which can be defined quite differently

depending on which side of the debate an author stands. For

instance, some define resource nationalism as the expression, by

states, of their determination to gain the maximum national

advantage from the exploitation of national resources.1 Such

definition is in line with the International Energy Forum’s own

effort, which concluded that resource nationalism is simply nations

wanting to make the most of their endowment.2

Some authors find that resource nationalism has part of its cause

in anti-Western sentiment of resource-rich developing countries

against economic globalization and the Western IOCs3 and even a

political antipathy to the USA (and by implication its oil companies).4

Others, like Jeffrey Wilson, have tailored more complex

definitions and have arrived at the conclusion that resource

nationalism embodies an inherently state-directed and mercantilistic
approach to the management of natural resources.5 According to