Vincent & Elkins rides out Enronitis as oil/gas sector sends its regards

Involvement in the Enron scandal has failed to change the views of in-house counsel towards Houston firm Vinson & Elkins. In Petroleum Economist magazine's latest survey, the firm was voted international law firm with the best knowledge of the global oil and gas sector.
The survey of 335 senior management and in-house counsel at oil and gas companies, banks and law firms put the firm ahead of US competitor Baker Botts. Topping the UK firms was Clifford Chance, which came in third overall, followed in fourth place by Herbert Smith.
It has been a difficult time for the sector, following the economic slowdown and Enron, but the real effects on utility lawyers have yet to be felt. With long lead times on many projects, last year was not as bad as expected. No doubt energy companies and their legal advisers will be waiting with baited breath.
"The effects of Enron are vast and have not yet ended," said Clifford Chance project finance partner Peter Blake.
There are still market rumours that other major US utilities will go into bankruptcy. Last week, Dynergy had its credit rating dropped to a BBB-minus by Standard & Poor's, which is equal to junk bond status; other large energy traders such as Williams and Duke have seen massive drops in share price.
Such news is likely to see gas companies and their advisers take a closer look at credit risk ratings. It may also lead to difficult times for smaller utility companies, whose ratings are not as good as their larger counterparts.
However, the news in the sector is not all bad. "For long-term players in the US and Europe, there's still a lot happening," said Clive Grant, senior legal counsel at Shell. Hot areas at the moment are the Middle East, CIS and Africa, where work is still constant. "Such jurisdictions are largely unaffected by all this [Enron and the downturn]. The oil price good as well," said Henry Davey, corporate partner at Herbert Smith, who specialises in utility work.
"Europe's going to need new access to gas because the North Sea is old and tired and depleted," added Blake. As a result, there have been major projects in areas such as the former Soviet states, where there are large natural reserves. And it will be these regions that firms will be hoping balance out the malaise in the UK and US markets.
While US firm Baker Botts topped Petroleum Econom-ist's rankings for the CIS, UK firms fared better in the Middle East and Africa, with Clifford Chance top in the Middle East and Herbert Smith doing well in Africa.