O&G UK Launches Agreements to Improve Industry Efficiency

Oil & Gas UK will unveil a suite of model agreements to help companies conclude deals quickly and efficiently, providing a valuable tool for the UK oil and gas industry to reduce costs and maintain competitiveness in the economic slowdown. The documents will help simplify procedures and reduce costs in several areas of oil and gas operations, including asset transfer, gaining access to infrastructure and in building new pipelines.

The first of the new model agreements, the Confidentiality Agreement (CA), will provide an off-the-shelf solution for companies to agree confidentiality arrangements when information is shared, particularly during the sale and transfer of assets and the gaining of third-party access to infrastructure.

Oil & Gas UK's operations and supply chain director, Paul Dymond, said, "Oil and gas projects on the UK continental shelf (UKCS) must prove competitive in order to attract the necessary investment and one way of doing this is to reduce the time and cost of deal-making. The new standard CA will oil the wheels of deal-making by ensuring a speedier start to substantive negotiations."

A second model agreement, the Joint Operating Agreement (JOA), provides a sound basis on which co-venturers can manage shared operations on their license, from selection and duties of the operator to apportionment of rewards and liabilities. This recent update of past versions now reflects current UKCS practice and is consistent with the industry standard Decommissioning Security Agreement (DSA).

This was previously known as the Decommissioning Cost Provision Deed (DCPD) and is being updated in light of the Energy Act 2008; it will be available on Oil & Gas UK's website along with the other model agreements.

Paul Dymond continued, "With input from a wide cross-section of industry, the model JOA has been updated to reflect new regulations and common practices over the last five years and to rectify some inconsistencies within earlier versions. We hope this helps parties quickly establish the arrangements needed to underpin successful partnerships between co-venturers."

Two model agreements also being launched to help simplify procedures and reduce costs for companies building pipelines or conducting operations within close proximity of another party's assets, are the updated Pipeline Crossing Agreement (PCA) and the new Proximity Agreement (PA).

These documents complete the suite of model agreements developed as a result of the PILOT Changing Gear initiative, which is aimed at promoting effective and timely deal-making within the UKCS. To assist companies in making the most of these agreements, Oil & Gas UK is running a series of workshops on June 22nd, 23rd, 25th and 29th. These can be booked through the events section of Oil & Gas UK's website.

"Standardization of agreements is an important part of the industry's objective to simplify operational and transactional procedures as it allows valuable legal resources to be focused on value-adding activities. Use of these agreements ensures more efficient working practices which can help to combat the effects on activity of low credit availability and of margins being squeezed by lower oil and gas prices," concluded Paul Dymond.