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Interview with Johanna Coelho, Legal Manager, PetroRio

Johanna Coehlo

What are the key risks that the industry is facing and where are you seeing the most potential for disputes?

Today, I believe that the main challenge consists of aligning the necessary reduction of risks, costs and impacts of existing operations with the desirable increase of productivity and generation of cash for new investments. For the longer term, I think the main challenge that all operators will face is how do you transform your hydrocarbon business into something greener. You can do this by just having another portfolio with other energies or just by implementing certain changes in your own oil and gas assets.

How do you see the force majeure term being applied in the current climate?

What you don’t know is how a pandemic is viewed by the courts and by the arbitral tribunals. There’s a lot of jurisprudence regarding force majeure clauses, but I think the new component here is the pandemic. I think that arbitrators and courts will have sympathy for the ones who are suffering with a pandemic. Let’s see how they react.

How litigious or cooperative is the industry right now?

I think the industry itself is quite litigious, but I think that litigation is expensive. I think that parties are less willing, because of the financial crisis, to enter into proceedings to solve problems. I think they will pause and look at the benefit of having an arbitration versus the cost of it, and what they’ll gain from it. You have to look at the long-term prospects.

Do you feel that in-house legal teams can be better equipped to manage risks and disputes?

We’ll look more at the commercial aspects of the case and weigh up whether we should enter into an arbitration or whether it can affect the commercial relationship with a party. I think that more legal departments are involved in this kind of activity, having this kind of commercial sensitivity and how it may impact the company as a whole.

How can you best guard against disputes that might arise from acquisitions?

We need to count on the experience of our external lawyers who have the expertise in what has happened in other fields. That’s the key, to have a well drafted agreement that covers anything that might come up, that has good indemnification, that has good material adverse change and force majeure clauses, and gets as much protection as possible.

Key contact

Phillip Ashley
Phillip Ashley
Valerie Allan
Valerie Allan