Research document no. 20. The constitutionalizing of the international legal regime of the petroleum investments and the world market reconstruction

We analyse the new international legal regime for upstream petroleum investments and ''state contracts'' in general. In striking contrast to the ''New international economic order'' and ''Permanent sovereignty over natural resources'' ideologies of the 1960 and 1970, the emerging regime promotes the sanctification of contractual economic rights; the strict definition of State sovereign prerogatives, and the severe limitation of their conditions of exercise; the internationalization of the settlement of disputes through direct firm-State arbitration; the integration of national territories in a competitive, transparent, non-discriminative global market for investment. We demonstrate that it is rooted in the principles of liberal constitutionalism, hence promoting the internationalization of the Rule of Law. Such a legal regime is conducive to the expansion of the market for petroleum rights, as it restores the institutional conditions for credible commitment by the State. It will also accelerate the trend toward the ''commoditization'' of hydrocarbon resources. Bilateral investments treaties (especially the United States BIT program) as well as multilateral/regional instruments both general (draft MAI, MIGA, MERCOSUR, ALENA) and energy-specific (Energy Charter Treaty) are analysed as the main pillars and diffusion mechanisms of the new regime. A final paragraph indicates the way forward: the evaluation of the impact of this new legal regime on the world oil supply curve, especially as it eventually reaches - or not - some of the lowest-cost, biggest-resources countries. (author)