CMS Cameron McKenna Nabarro Olswang LLP
International law firm Cameron McKenna provides a comprehensive law service to businesses, financial institutions and governmental authorities in many countries, with particular strengths in banking and finance, corporate finance, construction, infrastructure projects, energy and natural resources, financial services, life sciences (particularly pharmaceuticals and biotechnology), insurance, property and transport (aviation, railways, roads and ports), and strong specialist expertise in advertising and marketing, antitrust and competition law, EC law, employment, fraud, information technology, multimedia and telecommunications, intellectual property, press disputes and securitisation. Cameron McKenna has some 180 partners internationally, employs around 1,400 people worldwide and is the eighth largest law firm in Europe.
Energy & Natural Resources
Energy Minister Kwasi Kwarteng recently announced a review into the existing offshore transmission regime to address the barriers that the current single radial connection approach presents to the further significant deployment of offshore wind. The review suggests that greater coordination between industry participants – particularly between electricity networks, offshore wind projects and interconnectors – may be possible from 2025 onwards.
The Department for Business, Energy and Industrial Strategy recently ran its Capacity Market consultation on future improvements. Following the consultation, the government will now seek to make the necessary amendments to the Electricity Capacity Regulations and the Capacity Market Rules, before the prequalification window for the T-4 2024/25 and T-1 2021/22 auctions open in Summer 2020.
A recent government consultation proposes a pivot towards support being made available to a wider set of renewable energy technologies – including established technologies such as onshore wind and solar photovoltaics and less established technologies such as floating offshore wind – together with an ongoing commitment to support conventional 'fixed-bottom' offshore wind. This article summarises the consultation's wider set of proposed changes.
The Department for Business, Energy and Industrial Strategy recently launched a consultation titled "Heat Networks – Building a Market Framework" alongside its report on "International heat networks: market frameworks review". The consultation is seeking views on various proposed policy options for the development of a heat networks regulatory framework. The outcome of the consultation remains an area of great interest for the United Kingdom's future development of low carbon heating.
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.
New Oil and Gas Authority reports share industry knowledge and plans on technical solutions for MER UKUnited Kingdom | 18 June 2018
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.
Oil and gas consultancy agreements: giving effect to parties' true intentions in a commercial contextUnited Kingdom | 05 March 2018
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.
The government Department of Business, Energy and Industrial Strategy recently published a consultation proposing amendments to its guidance for developers and operators of offshore renewable generating stations and transmission assets in respect of decommissioning programmes. The focus of the amendments is on providing greater clarity around the decommissioning cost estimates that developers must provide in their programmes and the financial security that they must provide.
The House of Lords European Committee has published its report on energy security in the United Kingdom following its withdrawal from the European Union. Key among the report's conclusions is that investors require certainty as to the future of UK energy policy. The report also recommends that any change in arrangements should be accompanied by a transition period that ensures consumers are protected while businesses adjust their working practices, contracts and systems.
The Department for Business, Energy and Industrial Strategy recently issued a consultation on the siting criteria and process for a new national policy statement (NPS) on nuclear power. The NPS will apply to nuclear power stations expected to deploy after 2025 but before 2035, which have over one gigawatt of single reactor electricity generation capacity. It will establish the framework for development consent decisions on applications for new nuclear power stations expected to deploy post 2025.
A recent Technology and Construction Court decision considers the difference between prospective and retrospective approaches to delay analysis. The decision found that the two approaches will not necessarily lead to the same answer and may provide support for the use of prospective approaches in the assessment of extension of time claims. The court's comments are likely to encourage further debate over the use of the approaches in English law.
The Oil and Gas Authority (OGA) has published guidance on the development of supply chain action plans (SCAPs) in respect of all new projects, including decommissioning. In introducing SCAPs into the offshore oil and gas industry, the OGA is highlighting the importance of relationships with the supply chain in maximising the economic recovery of the UK Continental Shelf and unlocking the full potential of the basin.
The government has released its consultation on amendments to the Contracts for Difference (CfD) regime. The consultation confirms the government's intention to allow remote island onshore wind to compete in future Pot 2 allocation rounds. It also proposes changes to the CfD contract to lower the risk to consumers from conservative load factor estimates and to restrict reliefs awarded to generators in the case of force majeure or grid connection delays.
Ofgem recently published its Draft Guidance for generators: Co-location of electricity storage facilities with renewable generation supported under the Renewables Obligation or Feed-in Tariff schemes, which is open for stakeholder comment. The guidance does not introduce new policy; rather, it is intended to provide further detail on and clarification of how the installation of storage on existing accredited sites will be treated under the Renewables Obligation and Feed-in Tariff schemes.
In November 2017 Ofgem published updates on its target charging review (TCR) and reform of electricity network access and forward-looking charges. It recently held stakeholder workshops in this regard and further engagement is envisaged in early 2018, before a consultation on the TCR's proposed policy outcomes. In addition, Ofgem has announced that it has been served with a judicial review claim in respect of its recent decision concerning the reduction of the benefits available to embedded generators.
The Oil and Gas Authority (OGA) recently opened a consultation seeking views from the oil and gas industry on its proposal to increase the levy (which is payable by all offshore petroleum licensees and is its primary source of funding) to support the creation and then maintenance of a UK National Data Repository. The OGA proposes that the increased levy will be balanced through the removal of the corresponding common data access limited membership fees, resulting in an overall neutral cost to the industry.
The Court of Appeal recently upheld a High Court decision in which an oil company was found in contempt of court for holding an operating committee meeting in the absence of an alleged defaulting party. In doing so, the English courts have confirmed a willingness to intervene on an interim basis to preserve the status quo and prevent remedies available under a joint operating agreement from being exercised, pending the resolution of the issue in dispute by means of arbitration.
The Department for Business, Energy and Industrial Strategy recently published its long-awaited Clean Growth Strategy. The strategy was produced to comply with the Climate Change Act 2008, which requires a report setting out proposals and policies for meeting carbon budgets. Notable policies include the return to favour of carbon capture, usage and storage and confirmation that solar panels installed with a battery will attract a reduced value added tax rate.
Low-cost, low-carbon solutions: opportunities for energy sector presented by draft National Infrastructure AssessmentUnited Kingdom | 06 November 2017
The National Infrastructure Commission recently published its draft National Infrastructure Assessment (NIA) for 2018 for public consultation. The report is wide ranging, addressing systemic deficiencies in areas including housing, transport, telecoms and flood provisions. The draft NIA's central question in respect of energy infrastructure is how a low-cost, low-carbon energy future can be achieved, as well as potential funding models for a post-Brexit future.
The government recently published the Draft Domestic and Electricity (Tariff Cap) Bill. The bill's purpose is to provide for a temporary price cap for domestic consumers on standard variable tariffs and default tariffs. The cap will be set by the independent energy regulator, the Office of Gas and Electricity Markets, and is temporary in nature, lasting until the end of 2020, with the potential to extend it for a further three years if needed.
Ofgem seeks to clarify the role of DNOs in relation to electricity storage and small-scale generationUnited Kingdom | 23 October 2017
To date, there has been a lack of clarity on the role that distribution network operators can play in the development, ownership and operation of electricity storage. As part of the commitment to remove regulatory barriers in relation to the storage market contained in the Smart Systems and Flexibility Plan, the Office of Gas and Electricity Markets is consulting on changes to the electricity distribution licence.
The Law Commission recently published its reports on leasehold enfranchisement, right to manage and commonhold. The common theme in all three reports is to make each process simpler, quicker and more flexible and to reduce costs for leaseholders. While commonhold was introduced more than 15 years ago, it has hardly been used and the Law Commission seeks to make it a preferred alternative to residential leasehold.