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TAQA v Rockrose: A MER Analysis

December 22, 2020 by Uisdean Vass

The case of TAQA Bratani Ltd v Rockrose UKCS8 LLC, 2020 WL 00265815 (2020) is an important English decision 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 December 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 which analyses (albeit somewhat tangentially) the MER regime.

Click here to read the complete “TAQA v Rockrose: A MER Analysis“.

Category: General

About Uisdean Vass

Uisdean Vass has over 35 years experience practicing oil and gas law in the UK and throughout the World. He is qualified to practice in Scotland and in Louisiana and has worked in many different aspects of the oil business. Mr Vass is involved in giving advice on the new MER regime in the UK and he also advises governments on regulatory matters. The heart of his practice lies in advising oil companies on licensing and doing deals, whether through farmouts, asset sales or corporate sales.

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