30 March 2021
Oil and Gas Disputes Survey: Managing disputes risk – the in-house perspective
The CMS Oil and Gas Disputes Survey examined the key drivers of disputes and dispute management in the oil and gas industry, and how sector participants are moving towards new approaches to minimise conflicts and disputes. Based on more than 50 responses from senior legal managers and senior in-house counsel in the oil and gas industry across Europe, the Middle East, Asia Pacific, Africa and Latin America, it provides interesting insights into how disputes arise and are managed around the globe.Even before the onset of the COVID-19 pandemic, the oil and gas industry was facing considerable challenges, not least a prolonged period of relatively low oil prices and a global focus on lowering carbon emissions and “green” energy.Compared with the heights of 2008, prior to the global financial crisis, when international oil prices peaked at over US$140 a barrel, the US$55 barrel price for Brent Crude in late January 2021 still looked relatively low, despite the recent partial recovery. Those weak prices continue to place considerable pressures on industry players that are now often operating on historically low margins of profitability.It was not always this way. As vertically integrated giants, oil and gas majors were traditionally considered well able to absorb downsides within a broad portfolio of revenues and partnerships, but today many industry players no longer have that luxury. A number of geographic markets that were previously dominated by a few large upstream oil companies have transitioned through divestments to ownership by a larger group of smaller independent players with more focused portfolios and a range of financial models. With more operators and participants in many oil and gas geographic markets, it seems likely that the opportunities for disputes are increasing. CMS Oil and Gas Disputes Survey indicates that more could be done to prevent and mitigate against expensive time-consuming disputes.