In this heavyweight compendium, Peter Roberts has sought to bring petroleum industry legislation, contracts and practice, as applied by English law, under one roof – and does so with great success.
The use of English law in petroleum contracts has gained greater prevalence in the last decade, even where there is little to no connection with England and Wales, and this book adeptly explains the salient principles of English law as they apply to the issues that are most frequently debated within the petroleum industry.
Is an ‘agreement to agree’ enforceable under English law? Does English law recognise an implied duty of good faith? What does it mean to hold a petroleum interest on trust? When would a liquidated damages provision in a contract be declared a penalty and rendered unenforceable? Do loss of profits fall within the definition of ‘consequential loss’ under English law? These are just a few examples.
The book opens with a brief introduction to the legal system of England and Wales and the general law of contract. The author then goes on to discuss areas such as preliminary and conditional contracts, equitable rights and remedies, commodity sales, and the giving of guarantees and other collateral support.
In the latter half of the book, the focus shifts to particular areas of interest for petroleum industry practitioners, including the impossibility of performance, looking particularly at force majeure, hardship clauses and material adverse change provisions. Discussion then continues with damages for breach of contract, termination, allocation of liabilities, including the mutual hold harmless regime, and transfers of interests and rights of pre-emption. The book closes with a helpful summary of the boilerplate provisions that are too often ignored.
I thought the author could have expanded upon types of financing, as this area was of particular interest for the industry during the recent downturn. This involves traditional methods such as reserve based lending or, more interestingly, alternative forms of financing, such as the granting of overriding royalties and the sale of production payments. These types of financing are fairly well known in the US, but they also command use and interest worldwide. Decommissioning and the use of decommissioning security agreements is another area which could have received more attention.
In summary, Roberts has brought together some of the most frequently discussed and contested legal principles and issues in the petroleum industry. And in explaining how they are applied and interpreted from an English law perspective, he has created a worthy resource for non-English qualified lawyers and industry practitioners – and valuable contribution to Lex Petrolea.
Kimberley Wood is a partner at Norton Rose Fulbright whose principal areas of practice are international mergers, acquisitions, disposals and joint ventures within the oil and gas industry