The Mineral Extraction Risk Assessment (MERA) annual study is a forecast and report for 70-145 countries, 1997-2004, Present Year, +5 years, +10 years, +15 years. This multi-client study is conducted for The Japanese Oil, Gas, and Metals Corporation. The study provides comprehensive, reliable forecasts and risk ratings for those countries which are expected to show a rapid growth in oil, gas, and mineral extraction capacity.

BERI S.A. recognizes that risk assessment for petroleum companies must consider two factors unique to extractive operations:

First, the companies are increasingly forced to look for crude oil in high-risk locations. Each new exploration opportunity requires a decision about whether the specific contract terms and the probability of a major oil strike justify commitment or resources relative to the losses that could be incurred by a foreign company extracting a nonrenewable material.

Second, the time from signing a contract to the start of recovering crude oil on a commercial scale can last a decade. The subsequent years of production provide the necessary return on investment.

Consequently, risk assessment must cover a longer period than the time horizon for manufacturing.

A special measure of country risk that considers the two factors has been conceived for MERA. The sources of these ratings are a combination of BERI S.A. panel data and senior staff estimates.

Three risks are the bases for the Exploration and Development Subindex (E&D): (1) Contract, (2) Physical, and (3) Operations. E&D comprise 75% of the overall country assessment. The Financial Subindex, 25% of the overall assessment, rates the possibility of losing the invested capital. Nationalization implies compensation; confiscation indicates seizure with no compensation. This subindex allows for disputed and inadequate payment by the host country.

			Weighting
	1. Contract Risk: Continuity of Terms		25%
	2. Physical Risk:
		Personnel Injuries/Fatalities	10%
		Damage to Facilities	15%
	3. Operation Risk: BRS Composite Score*		25%
	Exploration and Development Subindex		75%
	4. Financial Risk:
		Nationalization	10%
		Confiscation	15%
	Financial Subindex		25%
	Overall Assessment		100%

	Ratings Scale
	0 – 34  Prohibitive Risk	Exploration activity is not recommended. Jeopardy to investment and personnel is excessive regardless of oil potential.
	35 – 49  High Risk	Exploration activity is recommended only when oil potential is very high and contract risk is moderate.
	50 – 69  Moderate Risk	Exploration activity is generally recommended. The probability of interference with commercial development is minimal.
	70 –100  Low Risk	Exploration activity is recommended. Full commercial development is probable.

* The Business Risk Service (BRS) has a composite score composed of the Political Risk Index, the Operations Risk Index, and the Remittance and Repatriation Factor. In the MERA system the composite score is used as an assessment of the general legal framework and business operating climate.

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Country List for MERA STUDY

	Algeria Angola Argentina Armenia Australia Austria Azerbaijan Bahrain Bangladesh Belgium Bolivia Botswana Brazil Bulgaria Burundi Cambodia Cameroon Canada Central African Republic Chad Chile China (P.R.C.) Colombia Congo, Democratic   Republic of Congo, Republic of Costa Rica C๔te d'Ivoire Croatia Cuba Cyprus Czech Republic Denmark Dominican Republic Ecuador Egypt	El Salvador Estonia Ethiopia Fiji Finland France Gabon Gambia, The Georgia Germany Ghana Greece Guatemala Guinea Honduras Hong Kong Hungary Iceland India Indonesia Iran Iraq Ireland Israel Italy Jamaica Japan Jordan Kazakstan Kenya Korea (R.O.K.) Kuwait Kyrgyz Republic Lao, People's   Democratic Republic Latvia Lebanon	Libya Lithuania Macedonia, FYR Madagascar Malawi Malaysia Mali Maldives Malta Mauritania Mauritius Mexico Moldova Mongolia Morocco Mozambique Myanmar Namibia Nepal Netherlands New Zealand Nicaragua Niger Nigeria Norway Oman Pakistan Panama Papua New Guinea Paraguay Peru Philippines Poland Portugal Qatar Romania Russia	Rwanda Saudi Arabia Senegal Seychelles Sierra Leone Singapore Slovak Republic Slovenia South Africa Spain Sri Lanka Sudan Suriname Swaziland Sweden Switzerland Syria Taiwan (R.O.C.) Tajikistan Tanzania Thailand Trinidad & Tobago Tunisia Turkey Turkmenistan Uganda Ukraine United Arab Emirates United Kingdom United States Uruguay Uzbekistan Venezuela Vietnam Yemen Zambia Zimbabwe