All

I want to thank you for your support this year. Today we were informed by ACQ Global Awards that Centurion Law firm was voted, the Oil and Gas law firm of the year in Equatorial Guinea.

This award acknowledges legal firms that have worked on a range of outstanding deals, excelled at strategic input into deals, demonstrated specific sector expertise, Shown consummate negotiation skills and have shown courage in litigation and dispute resolution. Nominees are selected based upon comprehensive, independent survey work with both general counsel and private practice lawyers worldwide.

In their statement, various business leaders, corporate counsels and government officials recognized Centurion as the “go to law firm in Equatorial Guinea with strategic relationships with big international law firms” and “the firm that finds clients the solution they deserve rather than send them just a legal memo”

ACQ stated that “as an undisputed leader in legal advice in Equatorial Guinea’s energy sector, Centurion Law firm provides leading edge, added value in bidding, structuring, implementing and financing upstream, midstream and downstream energy projects in Equatorial Guinea.”

As one of the most established law firms in the CEMAC region we will continue to go out of our way to deliver superb legal services of the highest international standards. As the head is this firm, it is a tremendous honor to be recognized as the top law firm in the oil and gas industry by our clients and peers. I believe our firm is becoming a leader in this industry because of our outstanding attorneys, collective experience and support from our clients and community. I pledge to continue this tradition of excellence.

Best Regards
NJ Ayuk JD, MBA
Centurion LLP

“We are planning to build a refinery, but will only use a small amount (of crude) coming from our own production,” he said. “We are having discussions with Sinopec regarding that…we were expecting to sign something today, but the time has gone too fast.”
Although Equatorial Guinea has approached other engineering companies based in the U.S., Spain, Italy and Germany about developing the refinery, state-owned Sinopec would be the only company that would take an ownership stake in the project if chosen, Mr. Obiang said, adding that a final decision could be made by year-end.

For the complete article please visit the source at the foxbusiness.com

With a team of seven in-house lawyers from around the world, Centurion was created in 2007 to provide legal services to oil and gas firms in Equatorial Guinea. It has offered advice on business law for Ghana, Cameroon, Gabon, Chad, South Sudan and Kenya and extended services formerly nonexistent in the market. It was the first state law firm to negotiate a productionsharing contract and a joint operating agreement on behalf of an international company – Afex Global and Vanco Energy.

TOGY talks to NJ AYUK

THE OIL & GAS YEAR:What is needed to bridge the gap between the legal traditions of irms from the US and Europe with the local framework?

N.J. AYUK: You need values and strong ethical training within your own irm so that you can understand the client’s interests as a services provider. The client’s interests are your irst commitment. We have been trained abroad but also understand the rules in Equatorial Guinea and the West Africa region. We are aware of the standards that a US citizen would expect, and we bring these expectations to the table and localise them. We take the time to sit down with local oicials and pay attention to their concerns and opinions. When we disagree, we disagree, but we do so respectfully and always try to ind a consensus moving forward.

TOGY:What is the legal authority that governs the oil and gas industry in Equatorial Guinea?

NA: Hydrocarbons Law 8/2006, which came into efect in November 2006, is the controlling legal authority on oil and gas activities in the country. Oil and gas operations are governed by joint-venture agreements and production-sharing contracts. In Equatorial Guinea, the production-sharing contracts are for an initial term of ive years followed by two terms of three and two years respectively.

TOGY: How has ease of business improved for companies entering the country’s energy industry?

NA: Compared with before, the situation has improved tremendously. It used to take between nine and 15 months to register a company here. However, with Gazprom Neft and Vanco, it took our irm three months to get these companies legally incorporated. This shows the evolving nature of the country. Over the past three years, the government has cut some of the bureaucratic bottlenecks from the process. It has realised that the easier they make it for businesses to come in and establish themselves, the better it is for the industry as a whole. The harmonised business laws for West African states have shaped a lot of business practice in the country and the friendly tax policies have also eased business entry and operation. There are now service contractors, service providers and oil irms from around the world making big returns on their investments here.

TOGY: Will production-sharing contracts with oil companies become more restrictive?

NA: If the government starts investing during the exploration period it will be more restrictive. If global irms keep carrying the government then it is likely to continue its liberal approach in giving more favourable terms to oil companies, because the government has an open investment policy. It is international best practice – when someone puts in all the money, they are justiied in demanding a higher share because they are assuming all the risk. It should be made more certain that this risk will be compensated for in the event that it is successful. In an area where the government is putting in 50 percent of the money, then it is most likely to ask for 50 percent of the related shares. If you adhere to international best practices and international compliance principles, encourage investment on the best possible terms to investors and ensure that the people of the country are protected and respected, then there is a suicient share of the proit for both sides. Both sides can build that synergy when they are investing in the oil and gas industry. Investors and the people will be happy and the government will have taken care of its obligation to the people. Looking within the legal and policy framework of the country, that is what will happen over the long term.

TOGY: Is the walk-in approach better than holding up a round for competitive bidding?

NA:Holding a round of competitive bidding is better. However, the government is always ready to attract investors in the oil and gas industry. The Ministry of Mines, Industry and Energy has always been open to accepting proposals from companies that are interested in open exploration blocks. The country can arrange a bidding round even at this stage because it has done it in the past, most recently in 2006. There is talk of a new bidding round in the near future, and this will create momentum with more players involved. It is always a big advantage when you have more players trying to participate in the bidding process. This gives the government a better chance to scrutinise the proceedings and see who has a better project plan, who has a better tender and who has the best proposals to meet the government’s vision for 2020. In light of the dynamics of the country, the government has decided not to wait for a bidding round. Instead, it will work with companies instead of making them wait. If a company believes it has the technical and inancial capability to invest in the country’s oil and gas industry here and is ready and willing to do so, then the government is open to that. That can be seen with Vanco, Gazprom Neft, the production-sharing agreement with Marathon and with other companies trying to enter the market. The government believes that if you have the ability and you believe you can do it, the process is essentially still the same.

TOGY: Is the legal framework in line with national goals of creating a regional services hub?

NA: If you meet the legal requirements then you will have the opportunity to invest. Ohada business laws apply to Equatorial Guinea when it comes to doing business here. Unlike Nigeria or Angola, local content rules are very accommodating to investors. Therefore, Equatorial Guinea stands to be a service hub for companies wanting to do work in the region. Once you are incorporated in Equatorial Guinea, you can work from your base to serve other Ohada states without needing many of the permits since the business laws are harmonised. There are other areas where investors should pay keen attention. In the upstream sector, they should focus on the construction and maintenance of crude oil storage tanks, manufacturing of consumable materials in exploration and ield transportation and equipment for rig movements. In the downstream sector, investors should consider domestic manufacturing of LNG cylinders, valves and regulators, installation of illing plants, retail distribution and development of simple, lexible and less expensive gas burners to encourage the use of gas instead of wood. A second LNG train will open many doors for service providers. Investors should view Equatorial Guinea as a place where they can get huge rewards from a variety of investment areas. Service companies are one area in which, if you provide the right services to oil and gas companies, you can get good returns. Luba Freeport is a step in the right direction and represents another area for investment, because any equipment facility within the country could not only serve Equatorial Guinea but also the oil and gas industry in neighboring countries as well. There are other areas in which to invest and still make substantial proits. Everyone tends to looks at blocks, but there is also a huge return on investment from providing services to these oil companies. This is true, because the country’s investment laws are very fair and successful in attracting foreign investment to the country

Wedded to West Africa

As a member of the Economic and Monetary Community of Central Africa (CEMAC), Equatorial Guinea has worked towards building an economic union and common market with other West African members over the past several years. Despite some success, CEMAC has been slow to implement many of its original objectives. CEMAC is an ofspring of the Customs and Economic Union of Central Africa, which began in 1966. CEMAC commenced operation in 1999, replacing the older organisation with the addition of a monetary union. In 1994 CEMAC introduced a tarif scheme for the Union, applying the same external tarifs on imports as non-CEMAC countries. Today CEMAC countries – including Cameroon, Gabon, Chad, Central African Republic and the Republic of the Congo – have a common financial, regulatory and legal structure. They use a common currency, the Central African franc, which is pegged to the euro, and the movement of capital within the CEMAC zone is free. Headquartered in Cameroon, the monetary union is administered by the Bank of the Central African States. Prior to 2000, Equatorial Guinea was one of the weakest members of CEMAC, requiring large support from the central bank. After major oil inds, today Equatorial Guinea accounts for 60 percent of CEMAC’s inancial strength, demonstrated by the construction of the CEMAC building in the capital Malabo. Equatorial Guinea was the only nonFrench speaking country in the Union until 1992, when it added French as an oicial language to tie itself more closely to other CEMAC countries. Despite measures aimed at greater integration, CEMAC ha not implemented many of its goals. A Customs union has yet to be achieved, many tarif and non-tarif barriers still exist, and the free movement of citizens is also not a reality. Equatorial Guinea’s inancial strength has led some to wonder whether the country would be better of if it left the monetary union. According to CEMAC’s treaty, the common market and economic union should be completed and evaluated by 2015. Now many are waiting to see whether the fulfilment of the treaty will be possible.

Reproduced with kind permission of The Oil & Gas Year. You can find the briefs in their original form by visiting www.theoilandgasyear.com

Reproduced with kind permission of The Oil & Gas Year. You can find the briefs in their original form by visiting www.theoilandgasyear.com

Reproduced with kind permission of The Oil & Gas Year. You can find the briefs in their original form by visiting www.theoilandgasyear.com

For the complete article please visit the source at the wsj.com

Will the government alter its regulations to encourage more energy companies to set up operations in Equatorial Guinea?

The government is likely to embark on a policy to provide fair returns to the state and investors, avoid undue speculation, limit undue administrative burdens, cull regulations and support healthy competition and market efficiency. In the near future, there is likely to be a more efficient fiscal system in place that takes into consideration the economic risks as well as the potential rewards.

What changes could be made to the production-sharing contract terms in the upcoming licensing rounds?

The government is likely to ask for better terms when dealing with new contracts. It is incumbent upon it to design its fiscal system to maximise the value of the revenues from its petroleum resources. A new economic framework might be needed in order to review the current system.

Some of the contractual elements that worked well prior to 2003 are now out of date and need to be redesigned. There is likely to be a change in the overall fiscal balance in the upstream petroleum regime as the government might want to maximise the value of its revenues due to the current high demand for its oil and gas resources.

Whatever the government decides on in terms of its new production-sharing contracts in the next licensing rounds, I hope the fiscal terms encourage efficiency on the part of international oil companies (IOCs). Setting a policy to provide higher profits to IOCs when they are more efficient will not be a bad idea. This would benefit the national economy because it would permit the government to obtain higher revenues.

The companies and the government will both profit from increased efficiency. This is important because if oil prices rise, IOCs may be induced to squander resources to capture new opportunities. The government should therefore increase the attention it pays to fiscal structures, which reward efficiency and provide a strong disincentive for squandering capital and operating costs. Its take should remain at approximately the same level but with lower costs.

What areas is the government yet to address to bring the country’s legal system up to an international standard?

The government clearly understands the need for judicial modernisation if Equatorial Guinea is to compete internationally, continue attracting foreign direct investment and ensure investor confidence. IOCs are attracted by the fundamental business opportunities represented by the presence of oil and gas reserves in Equatorial Guinea and other Gulf of Guinea countries. In order to make a long-term commitment, these firms must see that there is a serious, ongoing effort, ability and willingness on the part of the government to protect their investments.

Investors have recognised the judiciary’s ability to respect contracts, especially under the OHADA business law traditions. There has been a lot of work done in the area of judicial capacity building in the country. The government has engaged in various initiatives, strengthening the judicial branch, speeding up the processing of cases and increasing access to dispute resolution mechanisms.

Although progress has been made, challenges remain. Recognising this, the government has intensified its efforts to improve the overall governance environment. It is necessary if we want to compete globally.

What can international oil companies do to help local and regional companies to become competitive in the Equatoguinean market?

There is a great demand for services in the oil and gas industry but very little supply from the country or regional services providers. There are several steps that oil companies can take to encourage local companies to grow by freeing up opportunities. This includes ensuring that contracts for services are negotiated in the country and encouraging capacity building of nationals within their master service agreements and joint ventures with national companies. Local firms should also be included in the bidding process and informed of upcoming bids. In addition, there should be programmes designed for these companies.

It is not enough to train a national firm in business skills and never offer them an opportunity to apply those skills – this is basically setting them up for failure. Equatoguinean firms should also know that they have to perform to their greatest ability when provided with an opportunity.

Would passing stringent local content laws, such as those in place in Nigeria, Ghana and Angola, be effective at increasing local participation in the energy industry?

I am a firm believer in less regulation and letting the market work. There should be incentives to encourage local content and the government might have to step in if the companies do not act in ways that encourage the participation of local companies. A free and structured market, together with an enabling environment, is not only critical but also essential.

However, protectionism might be sensible in certain areas, especially to build national, regional and Africa-wide capacity. It is not possible to build a national industry if you do not provide the right incentives in the short term to create local capacity. Local companies face insurmountable odds when they compete with foreign companies that come to Equatorial Guinea who in some cases do not have to pay any duties or taxes. Local companies are challenged to remain competitive. The responsibility lies with the government and oil companies to help the sector strike a balance.

How is the government planning to combat capital flight from companies that win contracts in the country but do not register a local entity?

There are clear regulations concerning capital flight, but the compliance environment is weak. The government has always tried to encourage businesses to operate even when there are apparent violations. Companies are urged to register in the country and the government might take a hard-line stance on those that break the law in the future. The government could use the help of the companies that contract these firms to ensure that they are registered and comply with their tax obligations in the country.

Equatorial Guinea has been the subject of scrutiny by the international community with regards to transparency issues. How would you characterise the country’s oil and gas industry?

Transparency is the hallmark of today’s oil and gas industry. This is a very transparent industry and there are a lot of legal instruments in place to encourage compliance. The laws are very stringent. Foreign laws, such as the US Foreign Corruption Practice Act and the 2011 UK Anti Bribery Act, even call for personal liability for bad actions.

Equatorial Guinea is one of the few countries to have a senior government official responsible for ensuring the government fully complies with the Extractive Industries Transparency Initiative, which aims to set a global standard for mining, oil and gas firms. Companies should pay attention to the basic legal framework for oil and gas development in Equatorial Guinea, which is the hydrocarbons law. It ensures proper governance because it defines the roles of the state, establishes key institutions and sets out the basic licensing and contractual framework. New companies coming into Equatorial Guinea should stick to the rules.

Do IOCs respect the country’s labour laws? What are the major challenges?

The fundamental employment policies of the oil companies are good. Most do their best to respect the labour laws of the country. That is the only way to be a long-term player in this market and these firms have provided jobs to many nationals. When they make mistakes, they try to correct them and sometimes lawyers have to seek the help of the judiciary to resolve labour issues. Labour litigation in Equatorial Guinea is very low compared with other jurisdictions. However, oil companies can improve on their training and development and promotion of nationals. National employees can perform well if given the right training, mentorship and responsibility

“News briefs from the field” is reproduced with kind permission of The Oil & Gas Year. You can find the briefs in their original form by visiting www.theoilandgasyear.com

SESSION 4 – LEGAL TRENDS IN THE GULF OF GUINEA

Identifying the essential requirements of a sustainable petroleum regime | Trends in contract negotiations | Achieving win-win situations for successful ventures.

Chairman : NJ Ayuk, Managing Partner, Centurion LLP || J Jay Park Q.C., Partner & Chair, Global Resources Practice Group, Norton Rose || Nicolas Bonnefoy, Partner, Ashurst.

For more details visit http://www.cwcgog.com/ai1ec_event/session-4/?instance_id

“A young firm which is rapidly winning acceptance in a difficult market. With four associates, its the biggest law practice in Malabo. The firm specializes in Oil and Gas and with international companies. Their clients include Gazprom Neft and Vanco Energy. They offer services in English, French and Spanish.”

Read the complete article here.