All eyes on energy

The arrival of Texas firm Andrews Kurth in the UK proves how busy the oil and gas market has become. But the sector’s high level of activity has caught the eye of the European Commission

The oil and gas markets took centre stage last week both in Brussels and in London. Dawn raids by the European Commission on the offices of oil majors BP, Royal Dutch Shell and Norway’s Statoil as well as the oil price reporting agency Platts coincided with the latest in a growing line of US firms opening its doors in the City.

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The newest UK market entrant is Texas firm Andrews Kurth, which has hired Ashurst partner Peter Roberts to spearhead its London office, with Roberts becoming the US firm’s first English law partner.

Andrews Kurth, which has had a representative office in London for more than a decade, now plans to build out the office into a fully fledged oil and gas boutique.

The firm’s managing partner, Bob Jewell, told The Lawyer that London was a hub for transactional energy matters and that his firm was hoping to win more work from existing clients by having a presence in the City and an experienced English law hand to boot.

“Peter has both an in-house and private practice background and is an exceptional lawyer,” said Jewell. “He’s seen both sides of the fence, plus his experience in working in other parts of the world will be invaluable.”

Roberts resigned from Ashurst, where he had been a partner since 2010, earlier in May. Previously he had been general counsel at Centrica Energy, a partner at Jones Day in Singapore and Hong Kong and a partner at legacy firm Denton Hall.

Illustrious career

Roberts also featured in The Lawyer Hot 100, having acted on two big projects for Ashurst this year: the sale of interests of Rockhopper Exploration in the Falklands and working for Angola LNG on selling its liquified natural gas.

An Ashurst spokesperson said: “Peter has made a valuable contribution towards helping us build our global energy practice since his arrival in 2010. We wish him every success in the future.”

In recent months the UK’s energy market has become one of the most active sectors. In January another Texas firm, Bracewell & Giuliani, relaunched its London office with the hire of Simmons & Simmons energy specialist Julian Nichol as office managing partner. The move was shortly followed by the hire of Herbert Smith Freehillspartner ­Jason Fox.

Under the microscope

The hires underlined the current high level of activity in the oil and gas sector but last week’s dawn raids by the EC served as a warning to some of the key players that the sector is also under increasing scrutiny.

The raids, carried out by EC officials last week, is part of an investigation relating to the price of oil, refined products and biofuels.

In a statement the commission said that even small distortions of assessed prices may have a huge impact on the prices of crude oil, refined oil products and biofuels purchases and sales, potentially harming final consumers.

“Any such behaviour, if established, may amount to violations of European antitrust rules that prohibit cartels and restrictive business practices and abuses of a dominant market position,” it added.

BP, which is thought to have instructed Linklaters on the investigation, confirmed last week it was one of the companies subject to the investigation, adding, “we are co-operating fully with the investigation and are unable to comment further at this time”.

Shell, which is being advised by competition specialists at Clifford Chance, also confirmed its involvement in a statement, saying, “We can confirm that Shell companies are currently assisting the European commission in an inquiry into trading activities”.

Competition lawyers were unanimous in saying that while nothing has been proved as yet, any sanctions against the companies could be devastating, with several claiming this investigation could be “bigger than Libor”.

One partner at a US firm suggested that the investigation was likely to have been kicked off by a whistleblower, gaining that party 100 per cent immunity from sanctions.

“The job for the legal teams over the next few weeks will be to decide whether to defend the claims or cooperate,” said the partner. “Speed will be of the essence because the second company in, as it were, can reduce sanctions by between 30 per cent and 50 per cent if they provide significant added value to the investigation.”

Fines and misdemeanours

While no allegations of criminal conduct have yet been alleged, Christopher Coltart, a barrister specialising in white-collar crime and fraud at 2 Hare Court, points out that under UK legislation, oil companies in situations such as this could face unlimited fines.

“The directors could even face jail terms of up to five years, if found guilty,” says Coltart. “In addition, there would no doubt also be confiscation proceedings in order to claw back any sums illicitly earned. In the meantime, investigators will be scrutinising communications between the companies in order to establish evidence of collusion. For their part, the companies will be hoping to prove that all prices were competitively and lawfully fixed.”

To pile more pain onto BP specifically, last week it was reported that the oil company was lobbying Prime Minister David Cameron to intervene over the mushrooming cost of compensating US companies for the 2010 Deepwater Horizon disaster, with BP claiming fictitious claims were inflating the $7.8bn it has already put aside as agreed compensation.