After enumerating eight features any “win-win” upstream dealneeds to have, Exxon Exploration Co. President Jon L. Thompson toldattendees at the Cambridge Energy Research Associates executiveconference in Houston Tuesday that his company will be walking awayfrom “bad deals.

“Unfortunately, some countries around the world are not doingenough to structure legal, contractual and fiscal terms that aremutually beneficial” to the country and the companies doingbusiness there. And which countries might those be? “For example,right here in the U.S., the federal government keeps thinking itcan capture more economic rent, which unfortunately does not exist.We are also subject to a duplicative and burdensome regulatoryregime, including restraints on access to some of the mostpromising oil and gas resources in the U.S.

“Our obligations to our shareholders require us to invest theirmoney wisely or to not invest it at all. We may lose a project, butI also believe that host countries also lose if they drive awaycompanies, like Exxon, with financial strength, proprietarytechnology and technical expertise.”

Thompson’s eight characteristics of a win-win deal are:

-Block sizes large enough to accommodate efficientexploration,

-Simple to understand and evaluate bid requirements,

-Adequate time allowed for exploration and appraisal periods,

-Adequate time allowed for production periods,

-Transparent regulatory requirements,

-Competitively priced local personnel, goods and services notencumbered by duties, taxes and fees,

-Sale to domestic markets at the international fair market pricein a freely convertible currency,

-And a fair and stable fiscal regime, “the most importantcomponent of all.”

Thompson also expressed worries that the E&P industry couldexperience a technology brain drain due to cut-backs prompted bythe weak commodity price environment. “I am concerned about theindustry cutting too much in the R&D area. We need to alwayskeep in mind the long-term nature of the industry and the difficultand complex nature of the challenges we face. While we can notcount on technology to cure all of our future ills, it is still thelife-blood of the industry.”

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