UPDATE 1-Cutbacks by resource firms to spark disputes with governments -report

Thu Nov 28, 2013 9:04am EST
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* Arbitration cases in oil/gas soared tenfold in decade to 2010

* Firms, governments struggle over proceeds as prices fluctuate

By Eric Onstad

LONDON, Nov 28 (Reuters) - Disputes between resource groups and governments are likely to keep increasing as commodity prices fall and companies slash spending on new projects, according to a report by London-based think-tank Chatham House.

The world's biggest mining group, BHP Billiton plans to cut capital spending in its current fiscal year by about a quarter to $16 billion.

"Things are tight, this is the reality... countries will need to increasingly compete for the funds and provide stability for investors," Nick Allen, vice president of compliance at BHP, told a panel discussion at Chatham House.

Over the first decade of this century, international arbitration cases between companies and governments in the oil and gas sector shot up tenfold compared with the previous decade, while those in mining increased nearly fourfold, the report said.

While many disputes are spurred by conflicts over how to split profits from mines and oil wells, popular discontent can rise when populations fail to see benefits of operations and are kept in the dark about the deals.

"We've been through the wringer, we've been to the gates of hell," Allen said, adding that BHP now has tough procedures to ensure it communicates with all stakeholders on new projects.   Continued...