The powers that vested in the Oil & Gas Authority (“OGA”) on 1 October 2016 included those relating to meetings set out in Part 2, Chapter 4 of the Energy Act 2016 (“the Act”). That provides that OGA is entitled to be notified of and participate in 'relevant meetings' between companies operating in the UKCS. The term 'relevant meetings' is very broadly defined (see our comments below) and, as we anticipated in our previous Law Now, OGA has confirmed that this part of the Act will apply only in specified cases.
Meetings to be notified to OGA
By means of a Statutory Notice (the “Notice”) under Section 37 of the Act (available here), OGA has determined that a meeting between two or more relevant persons involving a discussion of relevant issues will not be a relevant meeting within the scope of Chapter 4 unless it is:
- an OCM or TCM meeting under a JOA, where that JOA is operating one of a specific list of fields identified by the OGA as a priority and listed in the Notice under the headings of ‘Field developments’, ‘Producing fields’, ‘Infrastructure’ and ‘Decommissioning’;
- an exploration and appraisal well pre-investment meeting where the intention is that this will lead to an investment decision regarding E&A wells; or
- a major project review meeting between Joint Venture partners for major project investment of £300 million or more in respect of greenfield, brownfield and decommissioning projects.
For those meetings where the notification requirements apply, notification and all other required information is to be sent to OGA by email to a specified 'meetings' OGA email address.
There has been some concern in the industry as to what impact the meeting notification requirements in the Act might have on industry’s daily business, as Part 2, Chapter 4 is drafted in very wide terms. It requires that OGA must be provided with at least 14 days’ notice of a ‘relevant meeting’, or an explanation of why it was not possible to provide 14 days’ written notice, as well as any information that is provided to other attendees. Where OGA elects not to attend the meeting then a written summary of the meeting and any decisions must be provided to OGA after the meeting.
As with most of the other obligations in the Act, these notification requirements fall on ‘relevant persons’ i.e. a person listed in section 9A(1)(b) of the Petroleum Act 1998, and that aspect is uncontroversial. Industry’s concerns arose from the very broad definition of a 'relevant meeting' – being a meeting between representatives of two or more ‘relevant persons’ where ‘relevant issues’ are discussed. In turn, ‘relevant issues’ are issues that either relate to the fulfilment of the Principal Objective (i.e. maximising the economic recovery of petroleum from the UKCS) or activities under an offshore licence. Those extremely broad definitions gave rise to some industry wits suggesting that even meeting for coffee or a pint in Aberdeen would now require to be notified!
More serious concerns arose due to the potential administrative burden that would fall on both OGA and the industry if every meeting falling within those broad definitions had to be notified. The requirement to provide notice 14 days in advance also had the potential to introduce unhelpful delay into ordinary commercial discussions. The uncertainty was particularly concerning because a failure to comply with the requirements of Chapter 4 is subject to sanction by OGA.
Those concerns have now, to some extent, been addressed by the clear approach taken by the OGA in the Notice, formally specifying what meetings are not ‘relevant meetings’ for the purposes of this part of the Act.
Confirmation of the scope of the obligation to notify will no doubt be welcome news to industry. However, concerns may remain as to whether the attention of OGA at these meetings will act as a deterrent to open and beneficial commercial discussions, with some parties perhaps reducing meeting frequency or limiting the scope of discussions at such meetings. OGA has expressly stated in the Notice that it has taken this approach because it wishes to “use the powers it has been given in a manner that is appropriate to its needs and does not place undue burdens upon industry” (rather than, for example, focusing on what is required to enable it to ensure that its own resources are appropriately and proportionately deployed). It remains to be seen whether these further reassurances will be enough to put industry at ease and encourage the constructive and collaborative approach envisioned under MER UK.
It is also worth remembering that the Notice can be revoked or amended by the OGA at any time and it seems likely it will be updated to take account of changing circumstances and priorities over time.