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Oil and Gas in Federal Systems

 

 
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Title: Oil and Gas in Federal Systems
 
Editor(s): George Anderson
 
Pages: 432
 
Publication year: 2012
 
Publisher: Oxford University Press
 
ISBN: 978-0195447323
 
Price: $76.50
 
Own it: Buy it on Amazon
 
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Oil and Gas in Federal Systems, published by Oxford University Press and edited by George Anderson from the Forum of Federations, is the result of the contributions of 24 respected scholars and experts in the areas of petroleum policy and federal systems. The study is a detailed examination of oil and gas management and revenue regimes in 12 […]

Posted June 13, 2013 by

 
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Oil and Gas in Federal Systems, published by Oxford University Press and edited by George Anderson from the Forum of Federations, is the result of the contributions of 24 respected scholars and experts in the areas of petroleum policy and federal systems. The study is a detailed examination of oil and gas management and revenue regimes in 12 federations.

Oil and gas stand alone among natural resources in their significance, globally and for large cross-section of countries. In many countries, such as Nigeria or Venezuela, oil is at the center of national politics and economic policy, but managing oil wealth presents challenges that have sometimes made it more of a curse than a blessing. “The success of a country in meeting these challenges will depend on many factors, including the nature of its political institutions one of which can be a federal system” authors state.

The book contains a detailed analysis of how federal states manage, or mismanage, their oil and gas resources. This analysis can be very useful not only for policymakers in federal states, but also in those countries where power is decentralized. Oil and Gas in Federal Systems is the first of this kind of publication that so precisely presents the possession of oil and gas and its influence on resources’ management, not only on the economic, but mostly business level. Each of the 12 chapters presents one federal state and  the solutions it uses to develop and manage the energy resources that it owns. The analyzed countries are Argentina, Australia, Brazil, Canada, India, Malaysia, Mexico, Nigeria, Pakistan, Russia, the United States, and Venezuela. These states differ on the level of development and resources wealth, but also on the level of democratization, which is crucial in the resources’ management.

If particular chapters focus mostly on the fiscal arrangements and managements around oil and gas, the last chapter was devoted to political and social processes that affect the oil and gas industry.

It is not a surprise though that it is a federal constitution that shapes the division of powers and the role of the government in the state economy. Authors suggest that constitutions respond to the social situation in the states, as well as to its economic condition. Therefore, some of the acts were drafted before the petroleum boom.  According to the authors, the size of petroleum resources in the economy is a crucial factor in political decisions. Thus, there are differences between the politics in Venezuela and Nigeria, where the oil and gas accounts for almost the entire economy of the country, in contrast to Canada or Brazil, where petroleum sector is important, but not significant for the country’s economic status.

It is very often assumed that the constitutional “ownership” of natural resources determines its management and revenues. But, the findings show that it is not always the case. For example, in the United States, the owner of onshore resources could be either the federal government or the state governments. The same situation occurs in Russia and Pakistan.

The study clearly states that federal ownership of the resources by an order of the government does not mean that the state is the one and only beneficiary from its revenues. In 8 out of 12 federations, the main responsibility for the management of the resources comes with its ownership, but in 4 cases it does not.  In India and Malaysia, the federal government manages the resources owned by the constituent unit while in Pakistan and Russia, the jointly owned resource is managed by the federal governments – authors stated.

The authors focused on such issues as the petroleum revenue powers and sharing, as well as on transparency and accountability, which, if broken, can be a serious issue affecting the people in non-democratic states. Corruption is very often associated with resource wealth, especially oil and gas. The protection of the environment and local communities was also examined.

The study is definitely the broadest study on energy resources in federal systems. It not only presents the reader with statistics that can sometimes be surprising even to those who are very familiar with energy security issues, but also provides an in-depth analysis of political, economic, and social issues that are vital for understanding the relationship between the federal and/or provincial government and the management of natural resources in the country. The book provides examples on how the agreements between the provincial and federal governments give access to resources to particular units, as well as how the regulation of pricing can discourage long-term oil and gas investment, leading to a decrease in oil and gas production.

The academic examination undertaken in Oil and Gas in Federal Systems is crucial for those who take part in academic and political debates concerning the improvement of the production and export conditions in federal states.


Malwina Haggard