Currently, more than a third of global oil and gas production comes from offshore fields. The exploration, development, construction, production, logistics, maintenance and decommissioning operations of these fields are carried out with maritime units, including offshore vessels, installations (fixed, floating and subsea) and pipelines. For many countries, the offshore industry is contributing significantly to the national and global economy.
However the offshore industry is not free from incidents and accidents as demonstrated by catastrophic events such as the 1988 Piper Alpha disaster, the 1989 Exxon Valdez oil spill, and the 2010 Deepwater Horizon blow out and oil spill. Consequently, issues of liabilities could be disastrous to the players in the offshore sector, making contractual risk in the upstream oil and gas sector a major concern to all involved. This concern usually manifests itself during and after incidents when contractual issues of liabilities and indemnities are contested in disputes between operators and contractors.
Today, working in the offshore industry requires not only good practical experience but also a thorough understanding of the complexities of the various technical, legal, contractual and regulatory aspects of the energy, oil and gas, and maritime sectors.
The UK oil and gas sector is predominantly an offshore sector with around 470 installations located in the UK North Sea (more than 1350 offshore installations are operational in the OSPAR maritime area), and more offshore renewable energy installations (windfarms) are being installed offshore Europe and around the UK’s coastal waters to add electricity to the national grid. A variety of offshore vessels are supporting the industry through all phases and are operating from main harbour ports along the coastline including Aberdeen, which is widely regarded as the UK’s oil and gas hub because of its close proximity to major offshore developments in the North Sea, and is playing an important strategic role in the offshore industry.
For many companies involved in the sector, the recent downturn of the UK’s sector forced the implementation of robust cost cutting measures and downsizing, but also presented an ideal opportunity to reflect on the past contributions, current climate and future challenges facing the industry. It also re-emphasised the highly cyclical nature of the global industry. Even before the Wood Review of 2014, the future of the North Sea oil and gas industry has been under scrutiny with industry players focusing on the maximisation of the remaining oil and gas resources and continuously looking at ways of prolonging the longevity of their offshore operations. Decommissioning is looming for most offshore installations – some of them have been in place since the 1960s.
Recent activities in the last two years show renewed confidence and a positive outlook for the UK oil and gas sector. Similarly, on a global scale, the industry has received positive projections for the near future with the US shale production, the role of major OPEC producers, opportunities in Africa, and the role of Russia and China in claiming substantial components in supply and demand. The transportation of oil and gas through pipelines and shipping is on the increase globally. Due to climate change and global warming, environmental sensitive areas such as the Arctic are going to be of increased importance for the maritime sector in the future, i.e. shipping routes and exploration activities. The offshore sector is a pivotal player in the inevitable transition from hydrocarbons to an energy sector that should meet the challenges of rising energy demand.
Over the years, RGU has established a close connection with the industry and are delivering various educational programmes relating to all aspects of the local and international industry. The oil and gas law masters course delivered by the Law School is specifically designed with a focus on the offshore industry and examines the legal, regulatory and contractual aspects of the national and global energy, oil and gas sectors. The course has received accreditation from the Energy institute for the next 5 years. It is therefore paramount to cater for all segments of the industry, which could be achieved through closer collaboration with industry stakeholders both in the UK and internationally.
New modules on maritime law, and health and safety law cover topics such as wet and dry shipping, insurance and risk management, which are very relevant to the offshore industry. The course covers key contractual and legal issues and major maritime incidents and disputes that have shaped the operations of the global industry and the regulatory landscape in a major way. These incidents have proved very costly to the industry, environment, and people as demonstrated in court cases that examined issues of health and safety regulation, risk management, liabilities and compensation which mostly hinged on factors such as a breakdown of relationships, disagreements in joint ventures, lack of regulatory control, contractual uncertainty and ineffective risk management.
Maritime incidents connected to the offshore sector therefore warrants in depth scrutiny in terms of the regulatory complexities, practical realities and theoretical understanding. The course team therefore consults on a regular basis with local legal and industry practitioners to address real problems facing the offshore sector. The importance of good education on the legal, regulatory and commercial aspects of the offshore sector is pivotal to anyone working in the industry and thereby contributing towards addressing the challenges, practical complexities and the national skills needs of the UK and global maritime and offshore oil and gas industry.
Leon Moller is a lecturer in Oil and Gas Law, specialising in Maritime Law and Oil and Gas Law at an International
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