Energy Cooperation and Political Risk Management under the “Belt and Road Initiative”

2017-05-08, by CHEN Zhen, ZHOU Zhanggui, from China Energy Fund Committee

Abstract: Energy cooperation between China and countries along the Belt and Road, which has been developing from unilateral to multilateral collaboration, advancing from regional to in-depth coordination and expanding to the entire industrial chain, has formed a “grand energy” cooperation structure.

The biggest challenge for Chinese enterprises in their endeavors to “go global”, are political risks ranging from traditional to non-traditional security threats, such as policy change, discriminatory intervention, terrorist attacks and nationalization, as well as regime changes and turmoil. 

Through risk assessments of China-Myanmar energy projects, the paper points out that political risks in energy cooperation are not necessarily force majeure and can be well managed by mobilizing available resources: 

First, conducting risk appraisal and risk prevention and control on the country where the project is launched; Second, assessing the environmental and social impact on local communities; Third, identifying an appropriate cooperation model and designing a suitable investment structure; Fourth, unifying technical standards and managing intellectual property rights; and Fifth, managing emergencies and disputes abroad.

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