The Oil and Gas Authority (OGA) recently launched a year-long UK Continental Shelf (UKCS) mediation pilot, which aims to test the extent to which mediation can assist in resolving disputes involving licences in the UKCS. The OGA has consistently emphasised that it would prefer to exercise its influencing rather than its regulatory role in assisting the industry to achieve the Maximising Economic Recovery Strategy for the United Kingdom, and sees mediation as a potentially helpful option.
The past 12 months have seen increased efforts by environmental activists to disrupt the business of oil and gas companies (or those associated with them) and draw attention to their campaigns against the use and production of fossil fuels. Public statements by groups such as Greenpeace and Extinction Rebellion suggest that this trend is likely to continue. Two recent cases provide some indication of the extent of any protection which may be sought from the courts in the event of disruption.
The Commercial Court recently decided that the right of non-operators to vote to remove an operator at will in a joint operating agreement (JOA) was not subject to any implied constraints, including good faith. As similar clauses are an option in the Association of International Petroleum Negotiators 2012 Model International JOA and continue to exist in a number of North Sea JOAs, this decision will be of wide commercial interest to operators and non-operators in the oil and gas industry.
The Crown Estate has confirmed that seven offshore wind extension projects will progress to the award of rights following the completion of its plan-level Habitats Regulation Assessment (HRA). Project-specific environmental assessments will be required for each site before the developers seek planning consents under the statutory planning process. Importantly, the plan-level HRA identifies mitigation measures that will be secured.
The Department for Business, Energy and Industrial Strategy (BEIS) recently published its proposals for business models for carbon capture usage and storage (CCUS). The CCUS forms part of BEIS's package of proposed measures to support the decarbonisation of the UK economy, which includes consultations on reusing oil and gas assets in CCUS projects, the regulated asset base model for nuclear and the facilitation of energy efficiency in the electricity system.
The Oil and Gas Authority (OGA) recently published its guidance on handling enquiries according to the Energy Act 2016. The guidance may prove useful to parties which find themselves subject to an enquiry, as it will provide them with an indication of the process that the OGA will follow. However, there are limits on the comfort offered by such an expectation, as the OGA has made clear that it will apply the guidance flexibly.
The Department for Business, Energy & Industrial Strategy (BEIS) recently launched a consultation on proposals regarding the consenting of large-scale electricity storage in England. As the current planning system does not distinguish between standalone and co-located storage technologies, storage developers must consider a number of issues to ensure that the electricity storage facility is consented lawfully. The BEIS's proposals provide much needed clarity in this regard.
Ofgem recently published its decision to launch a significant code review (SCR) into the electricity network access and forward-looking charging arrangements. The decision sets out the scope and guiding principles for the SCR, along with a timeline for the process. The aims of the SCR include encouraging the better use of existing network capacity and minimising future network costs.
Ofgem recently published its 'minded to' decision on its Targeted Charging Review. The decision sets out Ofgem's view that the residual aspect of electricity transmission and distribution network charges should be based on fixed tariffs for different classes of consumer rather than the other options under consideration (eg, usage during periods of peak demand). Ofgem also proposes to remove most of the remaining embedded benefits enjoyed by smaller distribution-connected generators.
Ofgem has published guidance for operators of essential services (OES) in the energy sector. The guidance aims to support OES in meeting their cybersecurity obligations under the Network and Information Systems Directive and the implementing UK law, the Network and Information Systems Regulations 2018. OES must now adhere to a timeline to demonstrate their compliance and work with Ofgem to make any necessary changes.
The Department for Energy and Industrial Strategy and the Offshore Petroleum Regulator for Environment and Decommissioning recently launched a consultation on the draft guidance to accompany the Offshore Environmental Civil Sanctions Regulations 2018. The overarching message of the new penalties regime is that the processes and outcomes of enforcement with regard to offshore companies engaged in illegal oil and gas-related activity will change considerably.
The Department for Business, Energy and Industrial Strategy and Ofgem recently released a progress update relating to their July 2017 joint paper "Upgrading Our Energy System: Smart Systems and Flexibility Plan". Among other things, the update discusses the steps that have been and remain to be taken to improve certainty over the treatment of storage in the current regulatory regime with the aim of providing further clarity for developers of storage facilities.
The government has released Part A of its response to the consultation on amendments to the Contracts for Difference Regime 1, primarily addressing its intention to allow remote island wind (RIW) to compete in future Pot 2 allocation rounds with less established technologies. The consultation response also refers to further proposals put to the government in relation to RIW, including improving RIW competitiveness.
The Oil and Gas Authority recently released updated guidance on planning and gaining consent to UK Continental Shelf field developments. The guidance is intended to assist those involved in planning a new field development and obtaining the consent required to proceed with a field development plan. The guidance was created with the industry's input to try to achieve consistent and successful high quality and high value projects.
The Oil and Gas Authority recently released its UK Continental Shelf (UKCS) Technology Insights and Southern North Sea Salting Study reports. The reports focus on current work taking place in the industry to develop technical solutions to maximise economic recovery of UKCS hydrocarbon resources.
The Council of the European Union has announced the agreement on the final version of the revised Energy Performance of Buildings Directive. The directive will enter into force 20 days after publication in the Official Journal and member states will have 20 months to transpose it. There are several long-tail requirements for which compliance queries will not arise until well after this period. A practical difference will be any surveillance or enforcement and the consultation on a 'green watchdog' in respect of England.
The Court of Appeal has considered the extent to which an arbitrator may, without the parties' knowledge, accept appointments in several matters in relation to the same or overlapping subject matters with only one common party without giving rise to an appearance of bias. As disputes in the oil and gas industry can reverberate through the value chain, and associated insurance, the decision is of particular interest to the sector.
A recent Court of Appeal decision has confirmed that a claim against an English-domiciled parent of a foreign oil and gas company may not proceed in the English courts if the claimants are unable to prove that the parent owed them a duty of care. The decision highlights that the court will look closely at the influence of group policies and the extent of practical or shared control that the parent has over the operations that are the subject of a claim.
National Grid recently published the provisional auction results for the 2017 T-4 Capacity Market Auction, with successful bidders having been provisionally awarded capacity agreements for delivery in 2021/22 at a price of £8.40 per kilowatt (kW) per year. The clearing price is significantly lower than that awarded in the 2016 Capacity Market Auction, where successful bidders were awarded capacity agreements at £22.50 per kW per year.
The Court of Appeal has provided guidance as to what the words "fully operational and enforceable" in an agreement might mean in the context of a production sharing agreement in Kurdistan – in particular, whether such an agreement may be considered fully operational and enforceable without ratification by the Federal Government of Iraq. In doing so, the Court of Appeal ventured into an area that is hotly contested in Iraq.