The energy industry is in a state of flux: it is consumed by concerns of supply shortages, the search for renewable and alternative sources of energy, and stiff competition in obtaining the limited resources left.
Such issues prompted energy giant Centrica to overhaul its legal function earlier this year in a bid to serve the management of the business better (The Lawyer, 4 June).
This shake-up saw Centrica’s legal muscle divided into two. Head of legal Adrian Morris went on to lead the legal team overseeing all downstream operations, while Peter Roberts was brought in as general counsel to front the upstream legal team.
For Roberts, who joined in July from Jones Day, where he was co-head of oil and gas, the return to in-house work was “like coming home”.
“I’ve always been a deal-doing energytransaction lawyer,” explains Roberts, who worked as legal counsel at both Exxon Corp and Balfour Beatty early in his career.
“I liken my job [at Centrica] to air traffic control: I have to make sure everyone’s moving in the right direction,” he adds. “I have to resist getting stuck into projects.”
With a team of 15 lawyers divided into into three units – upstream regulatory, transactions and Financial Services Authority (FSA) – and a panel of six external firms, Roberts’ airspace appears to be quite a crowded area.
With a variety of exercises taking place at any one time, Roberts’ process of familiarisation with Centrica’s business is proving very much hands on. The energy giant has been making headlines recently on its potential purchase of a 25.56 per cent stake in Belgian energy outfit SPE resulting from the Gaz de France-Suez merger, but Roberts says the acquisition does not in fact require a heavy legal workload.
“Actually, since we already have 25.5 per cent of SPE there is little work to do,” he explains. “What really excites me is the LNG [liquefied natural gas] business.”
This is because the LNG market is supply-constrained with finite sources to LNG, meaning tight competition for access to the resource.
“It’s a competitive market,” says Roberts. “We have to structure investment projects in unconventional ways to win LNG contracts.”
Centrica, which sourced 22 per cent of its gas from foreign suppliers in 2006, sources LNG from South East Asia, the Caribbean and Africa. Roberts says he is still building his commercial relationships within these countries.
Due to the stiff competition, Roberts believes it is imperative to be open to joint ventures with foreign suppliers or national oil companies and be culturally sensitive to such partners.
“We just have to invest in the form of making an effort with these stakeholders,” he says. “We must come up with these innovative opportunities to set ourselves apart from other prospective parties.”
Roberts explains that his team is involved in every stage of an LNG project as each involves a number of sub-projects, which kick off with creating an original investment structure with the foreign partner.
This can then be followed by the acquisition of foreign upstream gas reserves, construction of the extraction mechanism, liquidation and scaling of the gas and, most importantly, securing financing for the project.
Due to the complexity of such deals, it is no surprise that the legal transactions team is the largest of the three units with eight lawyers. Two lawyers focus on FSA compliance and oversight, while another three work in the upstream industry regulatory team which undertakes a hefty amount of “predictive work”.
“It’s all about working out where we will be in terms of industry regulations in the future,” Roberts explains. “We spend so much time trying to predict how regulations might change.”
But he admits that he has much to learn regarding market regulations and is currently spending a large portion of his time meeting with regulators such as Ofgem.
Roberts looks to Centrica’s panel of external legal advisers for assistance on issues ranging from tax and litigation (which is always outsourced) to specialist advice on complex deals or new jurisdictions.
The panel, which comprises Allen & Overy, Ashurst, Eversheds, Herbert Smith, Linklaters and Slaughter and May, is instructed on a project-to-project basis, for example with the extensive due-diligence work inherent in large acquisitions.
“It’s not a formal panel that comes under review,” Robert explains, emphasising that the firms are chosen because of their “heavy investment into Centrica”. “I’m talking about lawyers who call us to tell us about opportunities and share information with us outside of the billable hour,” he says.
As such, Centrica’s relationships are largely based on individual partners, such as Allen & Overy’s Mark Walker, Ashurst’s Michael Johns, Eversheds’ Ian Gray, Herbert Smith’s Paul Griffin, Linklaters’ Fiona Hobbs and Slaughter and May’s Paul Stacey.
With Centrica’s legal budget standing at £10m, it is a long-term investment worth making.
“While we are prudent, what’s really important to us is expertise. Call it an established pedigree,” says Roberts, who openly admits that external firms are not appointed based on cost.
With such support internally and externally, Roberts hopes to complete the process of learning the intricacies of Centrica’s business shortly.
“Familiarisation is a long process,” he admits. “It’s all about learning and understanding what’s going on. I find it frustrating that I haven’t learnt everything yet. “But I’m a man in a hurry, and I want to get things done.”
Name: Peter Roberts
Organisation: Centrica Energy
Title: General counsel
Reporting to: Managing director
Number of employees: 35,000
Legal capability: 15
Annual legal spend: £10m
Main law firms: Allen & Overy, Ashurst, Eversheds, Herbert Smith, Linklaters, Slaughter and May
Peter Roberts’ CV:
Education: LLB, University College of Wales; Chester College of Law
1989-91: Trainee, Linklaters
1991-94: Legal counsel, Balfour Beatty
1994-97: Senior legal counsel, Exxon Corp
1997-2001: Partner and head of Asia energy, Denton Hall
2001-07: Partner and head of global energy, Jones Day
2007-present: General counsel, Centrica Energy