Copyright of the Daily Oil Bulletin 2017
Alberta Regulatory Knowledge Goes International With New Organization
Service and supply companies looking to enter global markets may soon find themselves encountering a familiar presence abroad: the Alberta Energy Regulator (AER).
Earlier in February, the AER helped launched the International Centre of Regulatory Excellence (ICORE). The organization draws on AER’s knowledge and experience to help train regulators around the world and promote new approaches to common regulatory challenges. (More information can be found at icoreglobal.ca.)
“The primary focus is to push the boundaries on regulatory innovation, improve the practice of regulation and the profession of regulators, and also support government regulators creating their own unique pathways to regulatory excellence,” explained Eric Kimmel, vice-president of the AER’s strategy branch. “How do we embody these principles of regulatory excellence in a political and cultural environment that is very different and very varied?”
Kimmel was speaking as part of a panel at an Edmonton launch event yesterday for Going Global (II), a report produced by JWN in partnership with Petroleum Services Association of Canada (PSAC), Export Development Canada (EDC), Canadian Global Exploration Forum (CGEF), Business Development Bank of Canada (BDC), Global Affairs Canada and the Alberta government.
The report, aimed at providing information for service and supply companies looking to enter global markets, was officially launched at a Calgary event on Wednesday.
Kimmel explained that ICORE has already partnered with Mexico to help modernize that country’s regulatory system. However, the organization is also looking for ideas from Alberta companies on introducing innovations to regulatory systems both at home and abroad.
“Regulation hasn’t really changed in 100 years if you think about it. It’s been really the same framework applied across sectors, but now we need to rethink how we regulate because we’re seeing a shift in our geopolitical and market landscape. We have to be innovative and address some of these common strategic and operational challenges that confront all energy producing jurisdictions in the world,” he said.
Kimmel emphasized that the regulator’s role is to allow private companies to innovate ways to drive down costs and improve environmental performance. At the same time, ICORE could help promote Canadian oil and gas knowledge and leadership throughout the globe.
“All of you here have an opportunity to project Canada on the global stage and to adopt these best practices around sustainable energy development, so these ideas can be marketed, commoditized and exported,” he said. “This is where you will see that Canadian footprint on the global stage, and all of you have a role to play.”
Some jurisdictions will pose particular challenges for companies looking to project some of that Canadian leadership, however. Milos Barutciski, senior partner and co-chair of Bennett Jones LLP’s international trade and investment group, spoke at the panel on tackling higher-risk global markets.
He singled out seven of the 10 countries covered in the Going Global (II) report as more challenging for foreign firms to enter: China, Indonesia, Iran, Qatar, Russia, Saudi Arabia, and the United Arab Emirates.
International sanctions and local corruption can complicate matters for service and supply companies targeting those regions, he noted. Anyone expecting to simply hire a local consultant to help check off the various legal and regulatory requirements will soon be disappointed by the many unpredictable problems that can arise.
“It is as sure as day follows night in every one of those seven countries that you will be shaken down,” he said. “You will be shaken down by a customs official at the border if you need to get your stuff out.”
Even having strong anti-corruption laws on the books is no guarantee against corruption. Barutciski cited China as a cautionary example of the difference between laws in writing and laws in practice.
“They have very vibrant and enforced corruption laws, but they’re enforced selectively, and the foreigners are essentially collateral damage if they’re after this or that Chinese person,” he said. “You’re irrelevant. You’re road kill.”
Barutciski recommended that companies entering foreign markets, particularly more difficult ones like Iran or China, should be prepared to pay for top-quality legal and consulting services, just as they would be willing to pay for the best equipment to do the work.
There can be big rewards for companies willing to take the plunge into global markets. Shane Pospisil, head of business and development for New West Opportunities, has seen first-hand the impact of international activity on his company’s bottom line since it began a push into the United States nearly eight years ago. In 2009, the U.S. accounted for three per cent of New West’s revenues. That figure has since risen to nearly 60 per cent.
However, if companies want to expand internationally, they should not simply wait until work dries up locally, he advised.
“During the recent downturn, we had a lot of companies find religion when it comes to exporting,” he said. “You don’t have any activity so you want to quickly go out and export to Peru.”
He noted that many Alberta companies feel more comfortable sticking closer to home. A familiar country like the U.S. can offer a good starting part for companies looking to take their first steps beyond the Alberta border.
“The one thing they’re looking for is solutions that cut their cost of production, meet the environmental standards and requirements, and drive safety,” Pospisil said. “It’s not different [from Canada]. It’s the same if you’ve got a solid value proposition.”