Hogan Lovells says care will be needed with competition law following UKCS report

Mark Jones and David Moss of Hogan Lovells have commented following the publication of Sir Ian Wood’s final report on UK Continental Shelf (UKCS) offshore oil and gas recovery and its regulation — titled ‘UKCS Maximising Recovery’ — which calls for greater collaboration across the energy sector.

Competition partner Jones said that the emphasis in the report on the need for greater collaboration in key areas across the industry raises questions among other things about the compatibility of the recommendations with competition law.  

According to Jones, a particular example of this is the sharing of strategic information that the report strongly supports, and that its suggestion that this is co-ordinated via the new regulator as the way to avoid a competition law issue may not of itself be enough to address the point.  

He added: ‘Absent legal or regulatory changes, the types of information that the regulator could pass on from one industry participant to others may need to be restricted unless a clear case can be made either that valuable competition between them is not being lost as a result or that there are sufficient net benefits, ultimately for consumers, to offset that loss.’

Moss, a partner in Hogan Lovells’ energy industry group, said: ‘UKCS is one of the most mature offshore basins in the world with the potential to produce a further 12–24 billion barrels of oil equivalent. But there are real challenges to allow the UKCS to reach its full potential, given that many fields are interdependent. 

‘The recommendation to establish a new regulator with stronger powers is very material. There is, however, a great deal of detail, particularly in connection with the proposals concerning third-party access, that has to be worked out.’