Tall, thin, copper-rich Chile can often appear an anomaly in South America. Rather than picturesque Andean highlands, kaleidoscopic indigenous groupings, ponchos and pan-pipes that draw shoals of Gap Year students from across the world, it brings to mind images of a glistening economic success story, gleaming skyscrapers in Santiago and a haven of stability among more »
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It's always been a mystery to me why cost recovery, the process by which oil companies claim back billions of dollars in expenses from the governments of countries where they operate, is not formally part of EITI requirements. If EITI is supposed to capture all 'material' revenue flows between the companies and governments, why would it include a signature bonus of $50 million paid by a company to a government, and ignore cost recovery of $500 million allocated back to the company by the same government? And when you run the numbers, it becomes clear that two major trends in the oil industry in the past 20 years have significantly increased, not decreased, the importance of cost recovery in understanding the financial relationship between IOCs and governments around the world.