The process of renegotiation as a tool to assure the security of the energy supply

The recent conflict in Libya and the dispute over gas between Russia and Ukraine have highlighted that in international relations over energy supply, quite frequently, one has to face the unexpected and unforeseen events that heavily affect the good results of a business deal thus jeopardizing the continuation of the whole business relationship. Indeed, the outbreak of war (as in Libya), or an excessive rise of the cost of energy supply (as the one occurred following the conflict between Russia and Ukraine with negative consequences for the whole of Europe), determine an economical imbalance between the contractual services to the extent that the execution of the service, for one of the parties, becomes excessively burdensome or commercially unfeasible or even impossible to be carried out. The problem that has to be faced is whether, on the occurrence of supervening events which heavily affect the equilibrium of the contract an the interests at stake, one can appeal to the termination of the contract or of the single obligation, or invoke the renegotiation clause, that has become an effective tool in most important international agreements particularly in the energy sector. This paper aims to focus on the importance of renegotiation as the most common tool used by oil & gas industry to face the imbalance of the economic equilibrium of contracts that could seriously compromise the continuation of energy supply. Reprinted by permission of Megatrend University, Belgrade, Serbia