Key findings
Activities of greatest risk
Highest risk 1 - 8 Lowest risk
| Activity | Last year | This year | |||||||
|---|---|---|---|---|---|---|---|---|---|
| Question | Which are the activities where you (or your counterparties) see the highest risk of disputes arising? | ||||||||
| Region | Global | UK | EUR | APAC | Africa | LatAm | MENA | N. Am. | Global |
| Projects | 1 | 3 | 3 | 1 | 2 | 2 | 5 | 3 | 2 |
| Supply chain | 4 | 1 | 1 | 4 | 7 | 5 | 3 | 1 | 3 |
| Joint ventures | 2 | 2 | 1 | 1 | 2 | 2 | 1 | 3 | 1 |
| Host states and/or regulators | 3 | 4 | 6 | 4 | 1 | 1 | 1 | 8 | 4 |
| M&A activity | 7 | 4 | 3 | 6 | 4 | 6 | 7 | 2 | 6 |
| LNG sale and purchase | 6 | 6 | 3 | 1 | 7 | 6 | 7 | 3 | 7 |
| Oil and oil product sales | 5 | 6 | 6 | 6 | 5 | 2 | 3 | 3 | 5 |
| Other | N/A | 8 | 8 | 8 | 5 | 6 | 5 | 3 | 8 |
In terms of the type of activities which were most likely to trigger a legal dispute, four key areas were identified by participants, featuring prominently as high risk for disputes in all or most regions. Although their precise order of ranking has changed, these are the same four issues that were identified in last year’s survey as the key risk areas for disputes, suggesting these risks are embedded in the industry’s activities and reflecting its global nature. Topping the list, with respondents in all but one region naming it one of the top two activities most likely to lead to a dispute was joint ventures. That was closely followed by projects and supply chain issues which were both identified by respondents globally as key threats.
However, only 22% of respondents said they felt joint ventures presented a high risk as a source for disputes; 50% felt they were a medium risk. Projects were considered to be a greater threat with 45% of survey participants saying they were a high risk while 40% said they were a medium risk. For supply chain issues as a source of disputes, 19% said this was a high risk and 55% said they presented a medium risk.
Dealings with host states/regulators was the fourth prominent issue, identified as the most likely cause of disputes in three regions, but regarded as a less significant risk in other areas. M&A activity, LNG sales and oil sales were all generally seen as lesser threats globally, although in some geographic regions they were more prominently ranked as activities that could trigger disputes.
The perceived extent of the threat presented by each of these issues differs from region to region. For example, a quarter of the survey participants suggested supply chain issues were the greatest threat to the UKCS; the figure was 22% for North America and 19% for Europe but only 9% in Latin America and 3% for Africa. It is not clear, however, whether this can be taken as an indication that the supply chain in these regions runs more smoothly or is just less likely to resort to litigation when things go wrong.
Conversely, dealings with host states/regulators were seen as the area of greatest risk by respondents in Latin America and Africa, but the area of least risk in North America. That may reflect the different approaches adopted by the regulatory regimes that apply in these different regions.
With the exception of respondents from Asia-Pacific, LNG sales and oil sales were ranked as relatively low areas of concern for a dispute in this year’s survey although this is likely to rise in prominence due to the Russian invasion of Ukraine and its impact on these markets.
