Leonard Harvey
Senior Contracts Engineer/Manager/Specialist holding a first degree in Quantity Surveying (B.Sc. Honours) and currently studying for a second degree in International Energy Law. Extensive overseas experience within multi discipline, multi-cultural teams developing, preparing, negotiating, analysing, awarding and managing long life, high value, capital intensive, high risk, complex greenfield and brownfield offshore EPCIC Contracts related to FPSO, FPU, FSO, TLP, Subsea Tie-Backs and other projects such as Cardiff Wales International Airport new hangar facilities for British Airways.
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(i) “Fracking is safe and is primarily about “Not In My Back Yard” (NIMBY) and land use and the local role in democratic values taking precedence over the needs of the majority”, and
(ii) “There are many genuine health and safety issues as well as environmental concerns linked to fracking, which together provide a sound basis for deferring approval of major projects”
The current government is encouraging joint ventures with foreign businesses despite previous governments discouraging this by imposing heavy royalties on the foreign investor’s share from hydrocarbons produced.
Historically, oil [and gas] has been the subject of the most important international agreements and disputes……. Having high stakes, powerful players, fierce competition, economic volatility, long term contractual arrangements and political and economic instability. The International Trade Centre describes international ventures as typically of a complex structure and requiring an appropriate method for settling disputes arising, as recourse to the courts may not be the best forums.
The IOC has requested a note of advice considering aspects essential to achieving effective and impartial dispute resolution provisions.
Since the 1982 United Nations Convention on the Law of the Sea (hereafter UNCLOS) treaty was almost universally adopted in 1994, coastal states have been granted standard internationally recognised maritime regions from which they derive sovereign rights to explore the sea bed within their Exclusive Economic Zone / Continental Shelf and to exploit any natural resources they discover which, according to Ong , are both “inherent and exclusive ”.
Consequently, contractual risk in upstream oil and gas projects is one of the key challenges of the offshore oil and gas industry. How a particular contract has been drafted to allocate and manage those risks become of crucial importance when an offshore incident occurs, and the liabilities and indemnities of the parties to the contract (and any third-parties) must be determined.
This paper:
1. Discusses the key concepts of contractual risk, liabilities, indemnities and mutual hold harmless clauses developed within the jurisdiction of the United Kingdom Continental Shelf (UKCS) oil and gas licensing area. It was within the UKCS that an explosion and resulting fire occurred on the 6th July 1988, destroying the offshore oil production platform Piper Alpha, with the loss of 167 lives, an estimated £2 billion (current equivalent approximately £5 billion ) in losses, a lengthy public inquiry and fourteen (14) years of litigation.
2. Assesses the effectiveness of the particular contractual provisions dealing with liabilities of, and indemnities between, the contracting parties.
3. Refers to actual contracts, cases and academic references pertaining to this subject area of international oil and gas contract law.
As well as considering the overall legal and regulatory environment, legal advisors often recommend developers of an off-shore gas field (sellers) to consider and agree with the buyer “Take-or-Pay” provisions within their GSA, including having expressed remedies in case the buyer is unable to take the amount of gas it has requested the seller to deliver at any given time.
(i) “Fracking is safe and is primarily about “Not In My Back Yard” (NIMBY) and land use and the local role in democratic values taking precedence over the needs of the majority”, and
(ii) “There are many genuine health and safety issues as well as environmental concerns linked to fracking, which together provide a sound basis for deferring approval of major projects”
The current government is encouraging joint ventures with foreign businesses despite previous governments discouraging this by imposing heavy royalties on the foreign investor’s share from hydrocarbons produced.
Historically, oil [and gas] has been the subject of the most important international agreements and disputes……. Having high stakes, powerful players, fierce competition, economic volatility, long term contractual arrangements and political and economic instability. The International Trade Centre describes international ventures as typically of a complex structure and requiring an appropriate method for settling disputes arising, as recourse to the courts may not be the best forums.
The IOC has requested a note of advice considering aspects essential to achieving effective and impartial dispute resolution provisions.
Since the 1982 United Nations Convention on the Law of the Sea (hereafter UNCLOS) treaty was almost universally adopted in 1994, coastal states have been granted standard internationally recognised maritime regions from which they derive sovereign rights to explore the sea bed within their Exclusive Economic Zone / Continental Shelf and to exploit any natural resources they discover which, according to Ong , are both “inherent and exclusive ”.
Consequently, contractual risk in upstream oil and gas projects is one of the key challenges of the offshore oil and gas industry. How a particular contract has been drafted to allocate and manage those risks become of crucial importance when an offshore incident occurs, and the liabilities and indemnities of the parties to the contract (and any third-parties) must be determined.
This paper:
1. Discusses the key concepts of contractual risk, liabilities, indemnities and mutual hold harmless clauses developed within the jurisdiction of the United Kingdom Continental Shelf (UKCS) oil and gas licensing area. It was within the UKCS that an explosion and resulting fire occurred on the 6th July 1988, destroying the offshore oil production platform Piper Alpha, with the loss of 167 lives, an estimated £2 billion (current equivalent approximately £5 billion ) in losses, a lengthy public inquiry and fourteen (14) years of litigation.
2. Assesses the effectiveness of the particular contractual provisions dealing with liabilities of, and indemnities between, the contracting parties.
3. Refers to actual contracts, cases and academic references pertaining to this subject area of international oil and gas contract law.
As well as considering the overall legal and regulatory environment, legal advisors often recommend developers of an off-shore gas field (sellers) to consider and agree with the buyer “Take-or-Pay” provisions within their GSA, including having expressed remedies in case the buyer is unable to take the amount of gas it has requested the seller to deliver at any given time.