Legal Aspects of the Oil & Gas Industry Essay Example | Topics and Well Written Essays - 3500 words

Legal Aspects of the Oil & Gas Industry - Essay Example The large multinational oil companies owing to their economies of scale as well as proper use of human capital have attained efficiency. But empirical evidence also reveals that nationalization of foreign assets hinders foreign investments and have resulted in the drop of output, national income for oil-dependent economies (Guriev, Kolotilin & Sonin, 2009, p.2). 2. Background Now with the nationalization of the international oil companies by the host countries many questions arise in the forefront. It can be questioned that whether the government of host countries achieves parity with the international oil companies while exercising their permanent sovereignty over the natural resources by nationalizing the operations of oil Companies who are exploring and exploiting oil and gas resources in their countries and thus bringing about socio-economic growth. The right of the host government for breaching terms of oil and gas transactions contracts between the countries and companies can b e done at will which also questions the sanctity of contract in such cases. Libya and Iran are two oil-rich countries where nationalization of international oil companies have taken place with various legal problems where the International Court of Justice (ICJ) have intervened and have declared various decisions. The paper will present a judicial precedent in accordance with the decisions taken in the Iranian case and then will discuss in what ways it has affected the Libyan case.