This is the first in a series of articles on various sectors of legal work. They are all areas I would be interested in pursuing a career and all centre on international trade and commercial law. This first article is on the energy sector, which includes energy generation and distribution of water, oil and gas.
This is one of the most important and fast changing industrial sectors in law with massive social and geopolitical implications. The energy 'trilemma' of carbon emissions, energy cost and security of supply, combined with ageing energy assets mean that governments and energy companies face difficult challenges that could impact upon the economy of a country as a whole. It's a very complicated area, where an extensive knowledge of relevant legal issues affecting the sector combined with an understandingo f the commercial challenges facing energy companies.
Fortunately, there seems to be no sign of the commercial activity in the oil and gas sector diminishing. Even with the new age of "clean energy" there will always be associated legal activity involved. In this article I will outline the shifting focus on energy supply and demand and how the industry is adapting.
This is one of the most important and fast changing industrial sectors in law with massive social and geopolitical implications. The energy 'trilemma' of carbon emissions, energy cost and security of supply, combined with ageing energy assets mean that governments and energy companies face difficult challenges that could impact upon the economy of a country as a whole. It's a very complicated area, where an extensive knowledge of relevant legal issues affecting the sector combined with an understandingo f the commercial challenges facing energy companies.Fortunately, there seems to be no sign of the commercial activity in the oil and gas sector diminishing. Even with the new age of "clean energy" there will always be associated legal activity involved. In this article I will outline the shifting focus on energy supply and demand and how the industry is adapting.
This the fastest growing sector with political willingness and technological ability to take advantage of onshore shale gas and oil. There seems to be a drive for the US to become energy self-sufficient (no doubt prompted by uneasy US-Russia relations), with predictions this could occur within the next 20 years. The US has growing shale gas assets across the country with the Bakken shale in the north of the country to Eagle Ford in the south. This is in turn creating great opportunities for US business with increased energy exports and moving US shale-knowledge to other projects around the world.
The UK is also on the shale-bandwagon. However, there are serious doubts as to the environmental impacts shale extraction, through hydraulic fracturing (or fracking), has upon the environment. This is the controversial method of injecting water and chemicals into deposits deep underground. This has come to a head with the protests and legal action seen in West Sussex.However the economic benefit seen in the US is undeniable and in the 2013 Budget the Chancellor introduced a new generous tax regime, stating "shale gas is part of the future". Under this regime shale gas will be taxed at the same rate as North Sea oil and gas activities (at a combined rate of 62%, with allowances against a portion of the income reducing the effective tax rate to 30%). All of which is designed to encourage investment into shale.
North Sea Oil and Gas
International Action
Without a doubt, the main attraction to the energy sector is the international aspect of the work. Whilst there is activity nationally in the UK, the trend is for lawyers to see lots of work in the developing world. With a massive 'energy revolution' happening in Latin America and across Africa this is definitely where the most interesting work can be found.
For example in East Africa, Mozambique had four out of the five largest hydrocarbons discoveries in the world last year and the costs of acquisition and disposal of upstream assets and the development and financing of LNG facilities and relate onshore and offshore infrastructure project would exceed the total GDP for the whole country for last year. It is unnecessary to point out the significance this will have for upon the economy of Mozambique (not to mention any foreign investors into the country).
In West Africa, countries such as Nigeria (now said to be the largest economy in Africa) has numerous upstream assets coming in, driven by junior E&P companies monetising their assets and sharing E&P costs, and by others hoping to reduce their exposure to the political risks, legal uncertainties and security threats that exist there.
In Latin America, when Brazil discovered massive oil deposits off the coast around seven years ago it was heralded as a 'second independence' for the country. Since then there have been large-scale developments of the oil and gas discoveries. The results of Brazil's presidential election his October could determine the ownership of the Brazillian pre-salt areas to companies other than Petrobras ASA if either Senator Aecio Neves or former governor Eduardo Campos are elected. The results of the first pre-salt bidding round from October 2013 for entry into the Libra field showed Shell and Total with the largest holdings of the area in the Santos Basin.
Asia also remains the location of much of the world's energy commerce and a huge source of work for lawyers. China's demand for crude oil remains extremely high, with the country consuming half of the world's coal production. In Japan, following the Chernobyl disaster and the subsequent reduction in nuclear power, there has been an increased demand for Japanese LNG that has been vital to global gas projects.
The Future of Energy
It is clear that the energy sector remains strong and the outlook very promising. There is a positive outlook on the long-term investment, with a predicted USD15 trillion required for the sector in the next ten years, according to the International Energy Agency's forecasts. London has been cemented as the centre of worldwide energy commerce and as a sector, it continues to draw in the most interesting and global work.
Without a doubt, the main attraction to the energy sector is the international aspect of the work. Whilst there is activity nationally in the UK, the trend is for lawyers to see lots of work in the developing world. With a massive 'energy revolution' happening in Latin America and across Africa this is definitely where the most interesting work can be found.
For example in East Africa, Mozambique had four out of the five largest hydrocarbons discoveries in the world last year and the costs of acquisition and disposal of upstream assets and the development and financing of LNG facilities and relate onshore and offshore infrastructure project would exceed the total GDP for the whole country for last year. It is unnecessary to point out the significance this will have for upon the economy of Mozambique (not to mention any foreign investors into the country).
In West Africa, countries such as Nigeria (now said to be the largest economy in Africa) has numerous upstream assets coming in, driven by junior E&P companies monetising their assets and sharing E&P costs, and by others hoping to reduce their exposure to the political risks, legal uncertainties and security threats that exist there.
In Latin America, when Brazil discovered massive oil deposits off the coast around seven years ago it was heralded as a 'second independence' for the country. Since then there have been large-scale developments of the oil and gas discoveries. The results of Brazil's presidential election his October could determine the ownership of the Brazillian pre-salt areas to companies other than Petrobras ASA if either Senator Aecio Neves or former governor Eduardo Campos are elected. The results of the first pre-salt bidding round from October 2013 for entry into the Libra field showed Shell and Total with the largest holdings of the area in the Santos Basin.
Asia also remains the location of much of the world's energy commerce and a huge source of work for lawyers. China's demand for crude oil remains extremely high, with the country consuming half of the world's coal production. In Japan, following the Chernobyl disaster and the subsequent reduction in nuclear power, there has been an increased demand for Japanese LNG that has been vital to global gas projects.
The Future of Energy
It is clear that the energy sector remains strong and the outlook very promising. There is a positive outlook on the long-term investment, with a predicted USD15 trillion required for the sector in the next ten years, according to the International Energy Agency's forecasts. London has been cemented as the centre of worldwide energy commerce and as a sector, it continues to draw in the most interesting and global work.
