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Security of African Oil and Gas Projects: Risk Allocation Strategies

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As nations around the world scramble to lay their hands on new sources of energy to replace their heavy dependence on Russian oil and gas, attention is turning back to Africa’s resource-rich nations. Set back by years of underinvestment, these countries could unlock the door to energy security for many. However, security threats continue to pose a major impediment to the success of oil and gas projects in many countries across the continent.

The causes of these threats are numerous and diverse. Political instability, lack of governance, wars, local discontent, and uneven distribution of wealth are often blamed. While we remain far from solving all of these causes, their effects have the potential to trap national economies in a vicious cycle as the political and country risk deters investment and spurs underdevelopment.

Investment levels into African oil- and gas-rich nations will need to increase significantly and at a rapid rate in order to keep pace with growing international demand. However, investors and governments will need to find ways to overcome the looming and evolving threats posed by security risks. In this chapter for Upstream Oil and Gas in Africa, Nadine Amr and Nonku Zondo examine some legal structures that may enable investors to mitigate certain of these problems.

This is an extract from the chapter ‘Security of oil and gas projects: risk allocation strategies’ by Nadine Amr and Nonkululeko Zondo in Upstream Oil and Gas in Africa, published by Globe Law and Business.

The full book is available here.

This information is provided by Vinson & Elkins LLP for educational and informational purposes only and is not intended, nor should it be construed, as legal advice.