Non-Dollar currencies and non-LIBOR interest rates are gaining interest in the oil and gas industry. The document discusses how geopolitics, geostrategy, and geoeconomics influence international payment systems. Payment systems have evolved from barter to commodity-based currencies to fiat currencies and platform-based systems. The US dollar and LIBOR benchmark have dominated due to the size of the US economy and long history, but changes are possible as other currencies grow. National interests will still influence international arrangements.

1. Non Dollar Currency and Non LIBOR
Interest in Oil and Gas Business
Dr. Sampe L. Purba
A challenge to rebalance and reshape Payment System
Geopolitics – Geostrategy and geo economy Perspectives
Jul-22 1
Fakultas Hukum, Universitas Airlangga 28 Juli 2022

2. From Geopolitics to Payment System
• Geopolitics: Application of the influence of political and economy
geography international relations [economy, politics, foreign policy,
power, etc]
• Geostrategy : A decisive points with spatial consideration, by taking
into account the driving forces of demography, culture, technology,
resources and its mobility to meet national objectives
• Geoeconomics : Capitalizing Economy to pursue geopolitical
objectives  Territory, Resources or Influence
Instruments : Trade policy, investment policy, Financial and
monetary, energy and commodities, aid and cyber
 Payment System : Any system used to settle financial transaction
through the transfer of monetary value. Involving : Institutions,
instruments, people, rules, procedures, standards and technology
2
1
Jul-22

3. Post WW II new order : Political and Financial System Arrangement
Event Description Point to note
Atlantic Charter (1941)
Cairo Conference (1943)
Tehran Conference (1943)
Yalta Conference (1945)
Potsdam Conference (1945)
Post War European Rearrangement
Post War World Security and Economy Order
Basic Principles on UNITED NATIONS
 Marshall Plan to rebuild remnant of
war
 NATO, EU
 Pact Warsaw
UN established To promote global security and prosperity
Have 5 permanent UNSC with veto power
 France Gov’t was once lost to Axis,
form Govt in exile, and liberated by
Allies
Bretton woods
Monetary
System
Foundation
IMF and IBRD was established
Adjustable foreign exchange rate to a pegged
basket capital in Gold
Promote worldwide free flow trade
 Soviet oppose and not ratify IMF
and IBRD, due to the inclusion of
US Dollar along side the gold
($35 per oz)
The collapse of
Bretton Wood
system
1971 – Nixon halt currency pegged to USD (overvalued
of USD to finance its war in Vietnam
World Free floating currency
1973 : Oil Crisis – IMF to lend difficult countries under
Structural Adjustment Facilities
 Long trusted established
Currency favorism
 LESSON LEARNED – OIL and ENERGY
IN GENERAL – actually can RESHAPE
the PAYMENT SYSTEM 3
Jul-22

4. More than half US currency circulated overseas
4
 US Money in
circulation, kept
climbed since its
officially determined
under Bretton Woods
Conference, 1945
 The stability of the
Currency, the
international trade law,
and the domination of
US in Geopolitics and
Geoeconomics add
ammunition of trust to
the greenback
2
Jul-22

5. The Power of Long Trusted Currency
https://novascotia.ca/finance/statistics/archive_news.asp
Overall Deficit is financed through
 Printing of US dollar and/ or
 Issuing Bonds  Play with interest rate
ACCESS to SWIFT (Society for Worldwide
Interbank Financial Telecommunications) is like
Blood Circulation on body system
Jul-22 5

6. International Currency determinant
Size of the GDP or volume of international
trade
Development of the financial market
Financial stability of the issuing country
Policy to promote its international usage
Freedom of capital movement
Political and military power of the issuing
country
Ref. European Parliament, Monetary Dialogue Papers, June 2020
3
Jul-22 6

7. OIL and Gas Business  The Currency that matters
Characteristiscs
Long Term Horizon [beyond the
any terms of sitting government]
Cross and international
jurisdictions
Interlinked end-to-end value
chain transaction back-to-back
Internationally linked to dispute
resolution mechanism and
investment protection, such as
ICC, ICSID and UN universal
principles
Challenges to contractual agreement
Major Changes of
Circumstances
Force Majeure
Settlement dispute
resolution
Imbalance bargain
position
Retaliation
Bilateral settlement
Agreed to new terms
Jul-22 7

8. Example : When Circumstances Change
Jul-22 8
IT’S all about NATIONAL INTEREST

9. Interest Rate
• Interest rate  to reflect cost of borrowing money. Varies
depends on the credit rating of borrowers, monetary policy, and
international business circumstances
• LIBOR  world widely used benchmarking short-term interest
rates administered by InterContinental Exchange London
Interbank Offered Rate.
• Perceived to be trustworthy in terms of methodology, tracking,
standardization, transaction based, data-driven etc
• Ceased and demised by end of 2021 due to many complaints
and accusation of its methodology
• Other benchmarks for Risk-Free-Rate promoted by the giant
currency actors [CHF –SARON; GBP-SONIA;EUR- €STR; JPY –
TONA; USD – SOFR; SGD – SORA]
4
Jul-22 9

10. PRICE as the Function of Law of Supply and Demand
• Globalization – Standardization –
Dictation
 WTO Principles
- Non discriminatory vs MFN
- Free trade no barrier vs trade block
- Standardization and Transparency
Central Banks Principles
- Interest rate
- Inflation rate
- Money in circulation
- Prudential Standards
Q
P
O
S2
S2
S1
S1
D1
D1
D2
D2
Q1 Q2 Q3
P2
P1 E1
1
2
3
10
Jul-22

11. Evolution of Payment System
Payment
System
Description Forms and Instruments
required
Barter System Mutual direct meet of the needs Goods and services hand over
Commodity based Agreed extrinsic value Precious, Divisible, Durable, small space,
 Precious metal, gold
Money – gold
standard based
 Money issued is backed and guaranteed
by gold as per face value
Central Bank Physical gold
Fiat money  Only intrinsic value. The government
to guarantee its legal tender basis
Paper money, banking cheques,
travellers, credit cards, wire transfer etc.
 Policy Instruments to keep the value
Platform based Technology based, no need government or
banking system as intermediary
Crypto money, to disrupt the macro
economy payment system, may lead to
collapse the conventional payment system
IN ANY SYSTEM : SUPPLY and DEMAND LAW to determine the PRICE APPLY 11

12. Jul-22 12
Energy - InterNational dimension
5

13. Geoeconomy : The Power of Number – The Size that matters
@Rystard Energy, 2022
13

14. Concluding Remarks
Payment system is designed to promote the stability, security and
predictability of international transaction
US dollar enjoys a long proven history and hence widely used as
international currency. It’s hardly to be dethroned by other currency
LIBOR has also recorded a long and well accepted practices
benchmark, amidst some questions on its integrity of methodology
Terms of OiL and Gas business – as a contractual agreement among
parties – is (theoretically) based on consensual principles
Geopolitics, geostrategy and geo economy have big tone on bargain
position. It is also well supported by international related institution
Nasionalisme akan hidup subur dalam taman sari internasionalisme
Jul-22 14
5

15. Terima Kasih – Thank You
• Sampe L. Purba
Scholar : Universitas Pertahanan
LEMHANNAS RI
Background Knowledges
EKONOMI, HUKUM, GEOSTRATEGY
Medsos :
Mail : sampepurba123@gmail.com;
IG : sampe.purba
Twitter : @sampepurba
Linkedin : Sampe Purba
Web : sampepurba.wordpress.com
15

16. Jul-22 16

17. Jul-22 17
G20 KEY Economy Figures