Getting a Good Deal: Negotiating Extractive Industry Contracts

Many resource-rich countries negotiate complex contracts to govern mining, oil, or gas projects. Despite the critical importance of these contracts in determining the risks and benefits of these projects, many developing country governments face disadvantages in the negotiation process. This can be because of asymmetric information or expertise, lack of preparedness, power imbalances, and other factors. This course examines the challenges governments face in negotiating strong contracts, and strategies that governments can use to address these challenges and increase the chances of negotiating a good deal.

This course was developed by the Natural Resource Governance Institute (NRGI), CCSI, and the CONNEX Support Unit, with support from GIZ and the European Union. It is hosted by the SDG Academy.

This course is for:

• Mid- to senior-level government officials, including those with decision making authority, who work in ministries and departments involved in policy design, implementation, and compliance; officials from state-owned enterprises; members of parliament; parliamentary staffers; and researchers.
• Civil society leaders with a track record of analysis, oversight, and policy advocacy around the governance of extractive industries.
• Academics and doctoral students undertaking applied research or teaching on the governance of natural resources.
• Professionals from development agencies, including consultancies, aid agencies, and international financial institutions.
• Representatives from extractive industry associations such as chambers of energy and minerals or country-level industry think tanks.
• Law students or those who wish to better their knowledge on how to examine, plan, and execute the negotiation process.

Lessons you will learn during the course include:

• The success of contract negotiations and of the extractive projects they involve depend on the right government policies, strategies, legal and regulatory frameworks being in place.
• While the flexibility contracts afford may be beneficial, contract negotiations introduce a number of challenges and risks. However, there are a number of practical strategies that can support government negotiators.
• Model contracts can help manage the risks and challenges of contracts and contract negotiations, including by narrowing the scope of negotiations.
• Much of the work of negotiations happens before anyone sits down at the table and how a government prepares is critical to its success.
• A government’s work doesn’t conclude with the end of negotiations. Once a contract is signed, its success depends on a government’s ability to monitor implementation and enforce compliance.
• Both parties may also wish to renegotiate specific parts of the contracts if significant changes to the project change the bargain. Governments should approach renegotiations with the same preparations and strategies as they approach negotiations