Offshore staff
LONDON – Britain’s North Sea Transition Authority (NSTA) has called on UK North Sea licensees to collaborate better and ensure they complete their transactions promptly.
It follows the agency’s investigation into ExxonMobil’s sale to NEO Energy of interests in 13 producing fields, mainly operated by Shell, and Elgin-Franklin, operated by TotalEnergies.
ExxonMobil’s share of production from these fields (one was later removed from the transaction) was around 38,000 boe/d in 2019.
The NSTA had concerns that negotiations were proceeding too slowly, thus potentially impacting field development investments.
The investigation focused on collaboration between the seller, purchaser and operator. In its conclusion, the NSTA said that although the parties did collaborate, however, communication at times was lacking, and the roles should have been more clearly defined at the outset.
In addition, not all the negotiators had authority to negotiate “in the room,” the NTSA said.
UK offshore industry-developed guidance, including the Commercial Code of Practice 2016 and Negotiations Best Practice, March 2017, stresses the importance of defining a realistic timetable to completion at the outset; transparency of communication with joint venture partners; authorizing lead negotiators to negotiate “in the room” and avoiding demands for open-ended spending commitments and unlimited guarantees.
NSTA director of Regulation Tom Wheeler, said: “This case, which is by no means unique, highlights the importance of industry following its own practice guidelines, to avoid putting off new investors.”
04.18.2022
