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The Group operates in jurisdictions that are subject to significant political, economic, legal, regulatory and social
uncertainties.
The Group has operations in Egypt, Iraq, Yemen and Oman, as well as assets in Latvia and Pakistan and may, in the
future, explore the potential for licensing opportunities in other jurisdictions. As a result, the Group’s exploration,
appraisal and development operations are exposed to the significant political, economic, legal, regulatory and social risks
of the jurisdictions in which it operates. These risks potentially include:
expropriation, which could, among others, take the form of the cancellation, or termination of, or a unilateral
change or a series of unilateral changes to or unfavourable renegotiation of, the Group’s PSCs or other
contracts, licences, permits, authorisations or approvals;
nationalisation of property;
the unilateral imposition of onerous new or unforeseen obligations on the Group;
instability in political, economic or financial systems;
uncertainty arising from underdeveloped legal and regulatory systems;
corruption;
civil strife, war, hostilities, armed conflict, guerrilla activities, terrorism and piracy, including the current
offensive in Iraq by the Jihadist group known as the Islamic State in Iraq and Syria (“
ISIS
”) ;
restrictions on production;
price controls;
foreign ownership limitations; and
restrictions or the imposition of tariffs or duties on imports of certain goods or exchange controls.
In certain of the jurisdictions in which the Group operates, in particular Egypt, Yemen and Iraq, there is a recent history
of civil and political conflict including civil war and government change by coup d’état. In particular, beginning in June
2014, militants affiliated with ISIS have launched attacks on cities and villages across the north and west of Iraq. See
“—
The Group expects a substantial amount of its future activity to focus on Iraq, which presents a high-risk operational
and security environment
.” Local or regional armed conflict in particular could result in the partial or complete closure
of pipelines or of particular ports or significant sea passages, such as the Straits of Hormuz or the Suez Canal, potentially
resulting in higher costs, congestion of ports or sea passages, vessel delays or cancellations on some trade routes. In any
of the Group’s present or future jurisdictions of operation, it may be difficult or impossible to obtain insurance coverage
to protect against civil strife, outbreaks of infectious disease, acts of war, labour unrest, armed conflict and other security
incidents and as a result, the Group’s insurance programme may generally exclude this coverage. Consequently, such
risks could have a material adverse impact on the Group’s business, prospects, financial condition and results of
operations.
Any of the above or other factors could result in delay to the oil and gas exploration, appraisal and development by the
Group in the affected country or region and could restrict the Group’s ability to achieve its strategy with regard to the
nature and timing of its exploration, appraisal, development and other activities. Such risks could also result in disruption
to the Group’s production and development activities, as a result of damage to equipment and infrastructure. Any of
these events could adversely impact global oil and gas prices, and consequently have a material adverse effect on the
Group’s business, prospects, financial condition and results of operations.
Changes in oil and gas regulation or other government policy in any of the Group’s operating jurisdictions could
have a negative impact on the Group’s business.
Governments of oil and gas producing jurisdictions typically exercise significant influence over their domestic oil and
gas industries, as well as many other aspects of their respective economies. Any government action concerning the oil
and gas industry in the jurisdictions in which the Group operates (such as a change in oil or gas pricing policy or taxation
rules or practice, or renegotiation or nullification of existing contracts or oil and gas exploration policy, laws or practice),
could have a material adverse effect on the Group’s business. As a result of changes in law or policy, or in the
