Research On Legal Problems Of Chinese Oil Companies’ Offshore Exploration And Development

In twenty-first century, the global geopolitics is volatile, and the demand of oil is more and more strong,thus the oil price is soaring. In this situation, each member of international community will maintain the persistent, steady and adequate supply of oil,which is a major strategic task. China is no exception.There is legitimacy of oversea exploration and development of Chinese petroleum companies.As its investment patterns, there are mainly four kind of contracts, such as concession contract, service contract and so on. In recent years, Chinese oil companies made a success of oversea exploration and development investment. At the same time,three main legal barriers are hampering to Chinese petroleum companies. Namely market access, governments’violation of contract, and the dispute resolution relating to petroleum.The first barrier is referring to the market access system in petroleum area. The regulation to investment access for petroleum in host countries include as follows:limitation to the investment proportion of foreign petroleum companies, regulation for the access range, normalization for the requirements of foreign petroleum company’s implementation, review on the access of foreign petroleum company. Through the analysis on typical country’s petroleum market access system, it thus can be concluded as these follows:the opening extent of every country’s inter--state coordination in petroleum area differentiates from each other; The market access system owns the double functions both defence and regulation, the standard for environment is high. With the contemporary globalization of economy, it tends to expanding for the opening extent. Thus it is necessary to carry out the perfect legal due diligence for Chinese petroleum entities, accelerate the reform of system in the petroleum company and develop the environmental diplomacy. Meanwhile our government should courage private enterprise to join in oversea exploration and improve the evaluation system for environment. As host country, China should revise the rule of market access, rationalize the model of petroleum contract, simplify permission process, and bring in security examination system to exploring country.The second barrier is governments’violation of contract. Its specificity is embodied as that the violation carrier is formatting international petroleum contract. The fixed characters are existed in economical article, managing article, legal article, stability article and renegotiation article. According to the Draft Articles on Responsibility of States for Internationally Wrongful Acts, host countries’violations of international petroleum contract do not constitute the international wrongful act and undertake responsibility of state. Responsibility of state exists in such three situations:Denial of justice while violating the international petroleum contract, violating the contract and refuse to carry out the obligation in treaty, violation of the contract constitutes illegal expropriation. To keep away from the risk of governments’ violation, Chinese petroleum companies should make use of stability article and renegotiation article to add stakeholders of contract, Chinese government should timely transfer the traditional position in the contract and make special legislation for petroleum exploitation, establish special institution in government, provide definite finance and tax preference, promote the insurance system of overseas investment. Referring to that the disputes of governments’violation always are trigged by environmental regulation, labor protecting regulation and tax regulation of host countries, China should regulate the environment protection, labor protection and tax article through the stable contract and bilateral agreement to avoid being the defendant as violator of contract.The third barrier is the dispute resolution relating to petroleum. Its specificity roots in the absence of the dispute resolution article in international petroleum contract, which means more dependence on bilateral treaty for the dispute settlement. The main settle approach of overseas petroleum exploitation exists in ICSID’s Arbitration. In recent years, the crisis of legitimacy occurred in ICSID’s arbitration. The criticism focused on that the arbitration award pay more attention to private foreign investment but less on the public interests of host country. Furthermore, it is also criticized for the self--contradiction and the lack of transparency in awards. To deal with the crisis of confidence and develop more effective settlement for disputes of petroleum exploitation, China should revaluate Chinese BIT network, thus revise the preface, definition articles, investment treatment articles, indirect expropriation articles and settlement articles of investing disputes in it.