The main purpose of this work is to examine the role of legal and contractual terms, and domestic policies in attracting and dealing with oil investment in both developing and developed countries. Sudan and the UK are used as case studies, since both countries discovered oil in the early 1970s. The outcome, however, has been different. While the UK is now an established producer, and has, over the years, achieved great success in dealing with oil industry problems, Sudan has made little or no progress. This study is simply an attempt to identify the reasons for this. What can be done about it, and what is likely to happen?. These questions and many others are dealt with here. Thus, the main theme that emerges is that of the differences apparent between a developed and a developing country. This issue assumes special importance with the increasing sensitivity of public opinion about the problems of developing countries, and the concept that these countries are responsible for what is happening to them. Although primarily concerned with Sudan, it is hoped that the analysis and conclusions contained in this study should also be of interest to other developing countries embarking on the development of their oil resources. The study shows how governments in developed countries can actually define and implement terms and policies, which can influence the activities of international oil companies. This ability is a function of their bargaining power which stem not only from the traditional concept of ownership of the oil resources and their potentiality, but also from their strong institutional and regulatory systems. As a result of this, oil companies seek to rely on transnational measures of settlement of disputes, such as international law and arbitration, and bilateral treaties for protection of their investments in their dealings with developed and developing countries. A thorough and well constructed system is likely to respond more efficiently, and can be more predictable. That is why the UK government has been successful in attracting oil companies despite its extensive bureaucratic operational system, the hostile and difficult environment of the North Sea, and until recently, severe fiscal terms. The main conclusion to emerge from this comparative study is that Sudan needs to undertake a long-term commitment to create a reliable system of regulation in order to source the new generation of contracts required for continuity of the production of oil, upon which future finds may depend. The strengthening of its domestic and international reputation requires the institutionalisation of a democratic system, and importantly the willingness to learn. This will enhance the competence and strength of its links with the oil industry.
