Oiling wheels of lawEnergy lawyers are drilling for global work worth billions.

Lucy Hickman investigates how firms are tapping into oil and gas pipelines and benefiting from deregulationEnergy lawyers are a pretty happy bunch at present.

Oil prices are recovering from the dismal slump of the late 1990s, the UK government's determination to introduce more competition in the electricity market is creating huge amounts of work domestically, and gas worldwide is, metaphorically, going through the roof on all fronts.

Rising oil prices - from a paltry $10 a barrel at its lowest point in the late 1990s, up to a more respectable mid-twenties price-range this year - are generating more work for lawyers, as oil companies tentatively begin new projects.Doran Doeh, an energy partner at City firm Denton Wilde Sapte, says: 'When oil prices are low many projects become uneconomical.

Now prices are higher, it is encouraging oil companies to invest in exploration and production.

This is good for the legal profession, because although most oil companies have first-class in-house legal departments, the sheer volume of work leads to an overspill which private practices can pick up.' Fiona Hobbs, a partner in the energy department at magic circle firm Linklaters, explains that upstream work - legal work associated with the 'wholesale' part of the production process, such as drilling and platform building - is still mainly handled by in-house legal departments.

She says: 'Most of the bread-and-butter upstream stuff is done in-house or farmed out to smaller firms - they don't need City lawyers' expertise.

We might get involved where there is an element of political risk.

For example, we're acting for a consortium led by Exxon on setting up a pipeline between Chad and Cameroon.

That's something where on the project finance side, they preferred to spread the risk.'Work outsourced to private practice tends to be more downstream work - the 'retail activity' involved in getting refined products to customers, which might involve, for example, project finance work for the building of gas pipelines.

One such scheme is the high-profile Blue Stream project involving the construction of a 760-kilometre gas pipeline running across parts of Russia, under the Black Sea for 390 kilometres to Turkey.

Clifford Chance is acting for a range of financiers on the deal.

Partner Richard Pettit, who led a team of eight London lawyers and several more from the firm's offices in Russia, Italy and Hong Kong on the deal, says the financing involved is $2.6 billion while the project cost is$3.2 billion.'We're acting for the three arranging banks, which since 1995/6 have been working with Italian contractors and the Russian gas company, Gazprom, on putting together this financing.

We advised on structure, got involved in the negotiations and wrote the documents.' He says this type of work is on the up since Asia began recovering from its 1998 economic crisis - coinciding, of course, with the slump in oil prices.Analysts are optimistic that the aim of the Organisation of Petroleum Exporting Countries (OPEC) to keep crude oil within a $22 to $28 a barrel price-band is realistic, despite the cartel announcing plans last month to cut production by 1.5 million barrels a day.

OPEC said cuts are needed to offset slower world growth and milder weather expected in the spring.

Lawrence Eagles, head of commodity research at broker GNI, said at the time that he expects OPEC to achieve its longer-term aim: 'Having tasted honey for the past 18 months, OPEC understands what needs to be done.'Mr Doeh comments: 'OPEC isn't nearly as powerful as it used to be in the 1970s when it controlled a high proportion of the market.

It still has a big chunk of the market and it putting up or down production makes a big difference.

But there is still a big question as to what extent it can control prices.'And as one City law firm partner comments: 'Stability of the oil prices also depends a lot on the members of OPEC abiding by what they agree.'Not that lawyers suffer much in times of a slump.

There is merely work of a different kind: in the late 1990s companies worldwide frantically restructured and sold off assets to save costs.At least one City energy partner - who declines to be named - says the recent mega-mergers between the likes of BP, Amoco and Arco and between Exxon and Mobil were seen as a chance to cut staff.He says: 'Oil companies have made money for years out of letting people go.

They started at the time of the bust in the 1990s and have just carried on.

The companies say that all these mega-mergers are necessary to take on the bigger projects but I'm sceptical about that - they are so big already.

It's just an opportunity to cut more and more layers of management.' He adds that oil companies are therefore finding it difficult to attract and keep good lawyers.

'Since there are no longer jobs for life, and because lawyers in private practice generally make more money, there isn't the same loyalty.

In-house lawyers are more loathe to go abroad for long stretches at the drop of a hat.

This means more work coming in for private practices.'Oil aside, Herbert Smith energy partner Paul Griffin says huge amounts of legal work are being generated in the UK by the government's determination to open up the electricity market to greater competition through the New Trading Electricity Arrangements (NETA), scheduled to be introduced next month.He says: 'There are a number of disputes arising in the UK electricity sector because of NETA.

There is a considerable a question mark over whether long-term contracts, for example, for gas purchasing and selling electricity, made under the old scheme will be valid.'If the parties involved cannot agree,' he adds, 'it will be referred for expert determination which will be run as litigation would be.' A similar deregulation drive being undertaken by the EU in a bid to create greater competition is also leading to more work for lawyers in Europe.Ms Hobbs says: 'Spain is a big emerging market for independent power projects because of all the deregulation that is going on there.' She adds that many oil companies are looking to take equity stakes in power stations in the region - a popular trend in the UK in the early 1990s, which seems to have waned somewhat here of late.

Technological advances in the energy industry are also promoting more work, according to Ms Hobbs.

She says: 'A really exciting thing is going on in northern Russia where, because of technological advances, it is now possible to access oil and gas under frozen tundra which - up until recently - was impossible.

Everybody knew it was there, they just couldn't get to it.

We're advising a consortium led by Shell in this region.' But it is in the gas sector where things are really hotting up at present, according to many City lawyers, with countries such as China and Israel both putting in new infrastructures which will allow them to use gas, rather than oil or coal, to generate power.

Mr Griffin says: 'The most lively area at the moment is gas.

Quite recently, a lot of countries are looking to import it for power generation.' Work involved for lawyers in the area sees them not only getting involved in the financing for pipelines but also helping to set up infrastructures, which allows for the export of gas in liquefied form.Mr Doeh points out: 'Pipelines are a difficult and expensive business so many countries have to import gas in liquefied form.

This provides legal work setting up the plants, selling the supplies, organising contracts for construction, development and transportation.' Ms Hobbs predicts: 'We will see gas being big business for a long time to come.

A lot of other supplies - such as the North Sea - are coming to the end of their useful shelf life.' Lucy Hickman is a freelance journalist