A Case Note on TAQA v Rockrose: A MER Analysis

The case of TAQA Bratani Ltd v RockRose UKCS8 LLC, 2020 WL 00265815 (2020) is an important
English case which analyses the nature of the joint operating agreement (JOA) and reiterates
familiar and largely unsentimental principles of contract construction under English law. The TAQA
judge, Judge Pelling, had previously come to similar conclusions in Apache North Sea Ltd v Euroil
Exploration Ltd [2019] EWHC 3241(Comm) (England and Wales), which involved an analysis of the
interlinking of a farmout agreement and a JOA1. TAQA also includes a useful review of when terms
may be implied into commercial agreements.

While this case-note will cover these issues, my main interest lies in the Court’s holding and
observations regarding what I will broadly refer to as the principles of maximising economic
recovery (MER). MER is a convenient acronym for the new system of UKCS regulation inspired by
the Wood Review of 2014, and composed of certain provisions of the Infrastructure Act of 2015, the
Energy Act of 2016 and most particularly, of the MER Strategy (MER Strategy) which came into
force on 18 March 2016. Additionally, the Energy Act of 2016 laid the statutory basis for the
founding of the new UK upstream regulator, the Oil & Gas Authority (OGA). The OGA has since
published important guidance, such as on third party access (TPA) and satisfactory expected
commercial return (SECR) which amplify our understanding of MER. The concept of MER is
nowhere precisely defined, but its heart is to be found in MER Strategy Paragraph 7 (Central
Obligation) where it is stated that licensees (and certain others) must “take the steps necessary to
secure that the maximum value of economically recoverable petroleum is recovered from the strata
beneath relevant UK waters”. On 6 May 2020, the OGA launched a public consultation on
proposals to revise the MER Strategy. This consultation closed on 29 July 2020 and as of
November, 2020 (month of publication of this article), we still await further legislative changes in
the MER Strategy.

While the TAQA court spent little time on MER, the MER implications of the TAQA decision are
quite interesting. This is the first judicial decision of which I am aware which analyses (albeit
somewhat tangentially) the MER regime.

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