Introduction

Historically natural gas was not always a welcomed discovery. This has now changed and where the natural gas deposits are significant enough to justify investments, the deposits are welcome. However, the regulatory and contractual treatment of natural gas typically differs from that of oil.

Host government contracts, or granting instruments, typically include specific provisions on natural gas. The government take, declaration of commerciality, duration of the agreement, environmental regulations, among other rights and obligations of the parties can differ significantly from those of oil. The qualities of gas as a product, requires certain differentiation. The monetisation of natural gas is fairly different than oil. The existence of infra-structure and access to the market is likely to make the key decision to determine if a gas discovery is going to be commercial or not unless a large structure is proven (e.g. recent discoveries in Mozambique).

Therefore, the regulatory regime for any gas development are likely to require further considerations and special treatment from the relevant host government. Any failure to address these concerns might deter investments in an hydrocarbon with higher potential on natural gas reserves. This special edition is going to address some of these issues and concerns.