The major issues facing the energy industry in the Middle East will be in focus this month when ADIPEC marks its 30th anniversary in Abu Dhabi. The show and conference, which runs from 10 to 13 November, will attract around 100,000 delegates from around the world. Themes high on the region’s energy agenda will include gas supply and demand in the domestic market, the impact of the oil price slippage and the industry’s gravitation towards advanced technology solutions.
Members of the Andrews Kurth Intelligent Energy Law team from Dubai and Houston will be in Abu Dhabi for the event and will deliver a seminar exploring the issues around protecting and exploiting advanced energy technology in the region. Colleagues from the Beijing office of Andrews Kurth – partner Jerry Jie Li and associate Jane Jiang – will also be present to support work on the introduction of Chinese companies into the Middle East.
The Middle East is experiencing an increasing demand for advanced technology and expertise at a time when the industry globally is changing its approach to acquiring, transferring and protecting its intellectual capital. The factors influencing this shift include enhanced oil recovery, sour gas, heavy oil, tight gas, LNG, GTL, “clean fuels” refineries, carbon capture and storage, nuclear and solar technologies.
A further drive to advanced technology will certainly follow if the current and prospective Red Sea and East Mediterranean exploration and appraisal programmes bring deepwater fields into play in a region historically dominated by onshore and shallow water production.
Hugh Fraser, managing partner of Andrews Kurth’s Dubai office, said: “The region’s technology needs are evolving fast and the question companies in the market, or those wishing to enter it, need to ask themselves is whether their IP strategy is fit for purpose. However, this is not just a regional concern. The dynamics of the energy IP market are moving towards those of the major international technology markets and the energy sector needs to review and adapt accordingly. If technology is what generates value for your business, you need to be thinking about whether your strategies and safeguards are adequate.
“There are a number of fundamental commercial and legal considerations for market entrants. These include territorial application of patent rights, who owns new IP that arises from work, specialist personnel contracts and restrictive covenants that reflect the increasingly mobile and consultant-heavy workforce, licensing and enhanced technology services agreements, and infringement monitoring, defense and indemnities. Appropriate weight must also be given to the governing law of contracts and statutory laws, dispute resolution planning and jurisdiction issues.”
“With an increasing amount of private equity investment in the service sector, businesses also need to be planning ahead for corporate exit strategies and due diligence, including establishing IP asset registers and audits,” said Hugh Fraser.
These issues are arising against a backdrop of significant change in how the energy industry trades in IP and technology.
Houston-based partner Jeff Dodd, who chairs Andrews Kurth’s Intellectual Property and Technology Transactions group, explained: “The oil and gas industry has traditionally been heavily invested in technology and innovation embodied in tangible products, principally equipment, or in connection with services. The primary change now occurring is that transactions involving oilfield technology are becoming international, market-driven deals with new participants getting involved. At the same time, we are seeing a deconstruction of product and service components from IP and technology components. In other words, oil and gas is becoming like the other major, global technology markets.
“The industry’s traditional IP value chain – comprising the creation, securing, acquisition and monetisation of IP – now has many complicating factors.”
“It is in the monetisation of IP where perhaps the greatest changes are occurring. The industry is increasingly deconstructing IP from products or services to provide greater control over distribution and income streams. Monetisation of IP is considered earlier than ever before and market forces that compel mining of IP to identify and unlock value drive this. The market drives more aggressive IP acquisition or blocking, challenge and assertion, and IP is being evaluated more thoroughly for repurposing in other industry sectors,” said Jeff Dodd.
There is a corresponding change in how companies are seeking to protect their IP, according to Greg Porter, a partner and patent and trade secret law specialist with Andrews Kurth in Houston. “The energy industries currently rank 14th out of the 20 major technology industries in terms of patent litigation but we can reasonably expect this to change in an increasingly competitive market where IP is traded as a commodity separate from the traditional products and services,” said Greg Porter.
“Part of protecting against such litigation will involve strong employee and confidentiality agreements, maintaining a robust patent portfolio and carrying out cost-effective freedom to operate searches and clearances.”