The Impact of Stabilization Clause in International Oil Companies Agreement

ABSTRACT

The world’s dependence on oil and gas is increasing as global economies and infrastructure continue to rely heavily on petroleum based products.  All processes involved in the oil and gas industry are capital intensive from exploration to production to transportation on that note most underdeveloped countries cannot afford such huge amount so they seek help from multinational oil companies to invest in their country under a contractual arrangement. This paper will examine the various types of oil companies and the oil company agreement with particular reference to the ones operated in Nigeria, it further examines stabilization clause its origin and validity in international oil companies’ agreement. The paper made use of doctrinal research approach in order to breakdown the title into topics and subtopics given a detailed explanation on the impact stabilization clause has in international oil companies’ agreement. The paper submits that the inclusion of stabilization clause in oil company agreement fosters a harmonious relationship between the host country and the international oil company. It is therefore recommended that inclusion of stabilization clause in international oil company agreement is a necessity to safeguard the multinational companies and not an illusion.

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