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Interview on Turkmenistan Legal Framework to Attract Energy Investments Aligned to International Law Standards with Albertson Solicitors

13.04.2024 | 15:13 |
 Interview on Turkmenistan Legal Framework to Attract Energy Investments Aligned to International Law Standards with Albertson Solicitors

In preparation for the upcoming International Forum on Attracting Foreign Investment in Turkmenistan's Energy Sector, Orient's editorial team is pleased to present a series of interviews with prominent experts who will be attending the event as speakers. First on our guest list is Dr. Jamie Trinidad of Albertson Solicitors.

Albertson is a boutique legal practice providing advisory and representation services to private clients, corporate bodies, and sovereign states across diverse areas of International and UK Domestic Law. The firm unites highly qualified and experienced British solicitors and barristers as well as recognised foreign lawyers, speaking several foreign languages, admitted to practice in multiple jurisdictions and heavily experienced with high-rank transnational matters. It has one of the best the Public International Law practice among UK law firms to combine first-rate academic and practical expertise to provide a comprehensive and multidisciplinary offering. The Energy practice is led by a team of senior energy lawyers with longstanding, international experience of advising clients in the areas of Oil & Gas, Energy Infrastructure, Renewables, Power and Utilities, among others. In addition to all aspects of major projects, Albertson advises on energy disputes, energy policy and energy regulation.

For insights into Turkmenistan's legal framework for attracting investment in the energy sector, we interviewed Dr. Trinidad, Head of the International Law Department at Albertson Solicitors. Dr. Trinidad is a practicing barrister (King’s Counsel) called to the Bars of England and Wales, and Gibraltar, and also serves as a legal academic at the University of Cambridge.

Dr. Trinidad, can you tell us how has Turkmenistan attracted foreign investments and expanded its energy potential through partnerships?

Turkmenistan continues to harness its vast natural resources to further drive the country’s economic growth, and its energy sector stands as a beacon for foreign investments. The country has enormous wealth of hydrocarbons, which positions it as a major player in the Eurasian oil and gas market. It has been developing its onshore and offshore fields with the involvement of leading international oil companies, such as CNPC, Dragon Oil, ENI, and Petronas.

The country is ramping up its energy potential and attracting foreign investments in the offshore and onshore development of hydrocarbons. Cooperation and understanding memoranda, which aim at strengthening partnership between the countries’ energy industries and boosting development efforts at Galkynysh, the world’s second-largest natural gas field, have recently been signed between the Turkmengaz [Turkmen Gas] State Concern and UAE-based international energy giant ADNOC. In another recent development, Dragon Oil, a wholly owned subsidiary of global oil and gas holding ENOC, has been invited by the government of Turkmenistan to expand its operation in the Turkmen sector of the Caspian Sea and explore the offshore Block 19, and has signed an MoU with the Turkmennebit [Turkmen Oil] State Concern to that end.

How does Turkmenistan's focus on energy infrastructure investments contribute to the diversification of natural gas export routes and enhance energy security in the Middle East and Europe?

Investments in energy infrastructure are no less attractive and the Government of Turkmenistan prioritises various projects. With a view to diversifying routes for natural gas export, Turkmenistan and Pakistan have achieved a further milestone in implementing the Turkmenistan-Afghanistan-Pakistan-India (TAPI) gas pipeline project by recently signing a joint implementation plan to expedite the completion of the project. Natural gas supply deals with Iraq and Hungary last year evidenced the fruitfulness of Turkmenistan’s policy of diversification of supply routes, and contribute to energy security in the Middle East and Europe. In renewable energy, the country laid strong foundations for cooperation with the Adu Dhabi Future Energy Company - Masdar, which have resulted in the development of the country’s first solar photovoltaic (PV) plant.

How does Turkmenistan's legal framework balance the interests of the country and foreign investors in the energy industry? How does Turkmenistan's legal framework protect foreign investments and provide reliability for investors?

Turkmenistan’s legal framework for foreign investments relies on domestic legislation, bilateral international agreements and multilateral international treaties to which the country is a party. These three pillars ensure the balance in protecting the interests of the country by allowing enough flexibility to regulate the energy industry and respond to market volatility, and protecting the interests of foreign investors, by providing a stable legal framework and safeguards for the rights of investors.

A domestic legal framework for foreign investments is fuelled by several national acts, such as the laws ‘On Investment Activities’, ‘On Foreign Investments’, ‘On Subsoil’ and more recently, ‘On Free Economic Zones’ and ‘On Public-Private Partnership’. Turkmenistan is a party to bilateral investments treaties (BITs) with over 30 countries. The country is a party to the Energy Charter Treaty, the Washington ICSID Convention [the 1965 Convention on the Settlement of Investment Disputes between States and Nationals of Other States] and the New-York Arbitration Convention [the 1958 United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards] (‘), which all supplement the legal framework for the protection of foreign investments in Turkmenistan and contribute to enhancing enforceability of rights of investors from contracting countries. These laws aim to establish a reliable and predictable legal framework for investors, offering state guarantees and legal protection of investments and their returns.

How does Turkmenistan's Law on Hydrocarbon Resources protect investments in its oil and gas industry and ensure fair treatment for investors?

To foster a favourable investment climate and provide legal protection for investments in its oil and gas industry, Turkmenistan has adopted a key piece of legislation, the Law on Hydrocarbon Resources. Backed by other applicable investment legislation, the Law on Hydrocarbon Resources creates pre-requisites for exercising rights under fair and equitable treatment (FET) and full protection and security (FPS) standards. Investors carrying out activities under the Law on Hydrocarbon Resources enjoy the stability of contractual terms and conditions as well as a fiscal regime which transfers the investors’ expectations as to the economic effect of their investments into fair and reasonable ones and provides for the balance of interests of the parties to petroleum contacts. The law prevents any arbitrary interference into the business relations of the parties to the petroleum contract by executive authorities or law enforcement. It also ensures access of energy investors to the decision-making process for licensing, bidding, and contracting, protects the investors from any discriminatory measures, and enables them to exercise their right to due process of law. A number of Turkmenistan’s BITs, which encompass energy investments and, in one way or another, ensure the application of FET and FPS standards, as well as Energy Charter Treaty, have tightened the country’s legal framework for the protection of foreign investments in the energy sector and provide efficient interpretation tools for application of those international standards domestically.

A general legal framework for foreign investments in the country enshrines the non-expropriation principle and the Law on Hydrocarbon Resources refines it further by obliging the state to compensate fairly in case of requisition of hydrocarbons due to emergencies such as war or threat of war, natural calamities, or similar necessities.

What role has the integration of international arbitration standards in Turkmenistan's energy sector investment projects?

Development of an attractive framework for foreign investments cannot be complete without establishing reliable access and legal arrangements for full-scale alternative disputes resolution (ADR) and investor-state disputes settlement (ISDS) schemes. Investment projects in the country’s energy sector pioneered and accelerated the accommodation of international arbitration standards into domestic law and practice, and boosted integration of the country into the international system of ADR and ISDS.

What measures has Turkmenistan taken to constitute and institutionalize international arbitration within its international commerce and investment regimes, and how do these efforts contribute to creating an investment-friendly environment in its energy sector?

Turkmenistan has been progressing incrementally towards the constitution and institutionalization of international arbitration within the country’s international commerce and investment regimes. Investors under the Law on Hydrocarbon Resources have been granted and exercised their right to have arbitration agreements accommodated in their petroleum contracts. From the outset of its independence, Turkmenistan acceded to the Energy Charter Treaty and ICSID Convention and committed to the dispute resolution frameworks they provide. It then adopted its Law ‘On International Commercial Arbitration’, which is mostly modelled on the UNCITRAL Model Law [United Nations Commission on International Trade Law (UNCITRAL) Model Law on International Commercial Arbitration] and allows the adaptation of arbitration agreements to investment projects to fall within its jurisdiction. To further implement the Law on International Commercial Arbitration, the Government has legislated to establish an international commercial arbitration centre at the Chamber of Commerce and Industry of Turkmenistan (the Law ‘On the Chamber of Commerce and Industry of Turkmenistan’), an activity which is currently being pursued by the Chamber.

These comprehensive measures demonstrate Turkmenistan's commitment to an investment-friendly environment that adheres to international standards, with the ultimate goal of attracting long-term and large-scale foreign investment into its energy sector.

Navigating the complex landscape of transnational energy investments nevertheless presents legal challenges for sovereigns and investors alike. At Albertson Solicitors, our energy and international law specialists are qualified in multiple jurisdictions (including Turkmenistan), so we are exceptionally well-placed to guide our clients through these challenges at the junction of domestic and international law.

Thank you Dr. Trinidad for your invaluable expertise and insights into the legal framework for attracting investment in Turkmenistan's energy sector!

Dr. Jamie Trinidad will participate in the upcoming TEIF 2024 Forum in Paris as a speaker in the third session entitled: "Commodities for the Energy Transition: New Trends and Investment Opportunities". Other speakers for this session include prominent energy sector experts such as Julien Pouget - Senior Vice President, Middle East & North Africa Division, TotalEnergies Exploration & Production; Michael Curran - Head of Emissions Trading, Vitol; Bart Wauterickx - Director, XP Upgreen and many others.

The forum will take place on 24-25 April in Paris. To date, more than 250 delegates from 30 countries have registered for TEIF 2024. Registration for international delegates is open until April 19.


Photo: "Turkmen-forum"

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