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How would you advise in-house legal departments in the oil and gas sector to cope with the industry’s changes in the last five years?

Over the last five years, the global oil and gas sector has been characterised by a strong need, triggered by declining oil prices and a generally high cost level, to significantly reduce capital and operating costs enabling industry to survive and be sustainable and profitable in the long term. In parallel, on the national scene, the make-up of the Norwegian oil and gas industry has continued to evolve from the typical “major oil company” profile to a much more diversified group of players. These characteristics also influence in-house legal departments. With this background in mind, it is fundamental for in-house legal departments in the oil and gas sector to embrace “change”, just as our in-house clients have to do. In this context, the lawyers need to be on top of relevant legal developments though with particular emphasis on acquiring new skill sets and competencies in legal areas which to some degree could be ignored in the past. For example, financial challenges for certain companies will for their co-venturers necessitate more in-depth legal knowledge about default and bankruptcy laws, as well as knowledge about the mechanism of such provisions in joint operating agreements and in other typical oil industry agreements throughout the value chain from wellhead to market.

What would you say are the unique qualities required to be successful as an in-house lawyer in your industry?

An in-house lawyer must first of all identify with their sole client, the company they are working for, and clearly support its visions and goals. Such attitude will facilitate the in-house lawyer’s relationship-building with client representatives in various departments, and increase business knowledge enabling the lawyer to provide the best possible legal advice, based on true facts and a solid understanding of the business. However, such position is impossible to achieve without gaining trust throughout the company, over time. Key components of having trust are to have – and demonstrate – a high ethical standard and engage in compliance policies and issues. Equally important is being a team player, a good communicator, having a business acumen and work with client representatives in an effective manner to achieve practical solutions in the best interest of the company.

Do you have any effective techniques for getting the most out of external counsel, in terms of how to instruct them?

I have found it quite useful to prepare external counsel, for instance ahead of a face-to-face kick-off meeting, for the matter at hand by sending them pre-read material, summaries etc. to make the kick-off meeting and subsequent communications as effective as possible. Also, for each matter we will use our corporate outside counsel policies which, among other things, are based on our company’s experience over time with external counsel. Just as for in-house counsel, we endeavour to ensure that expectations, human resources, deliverables and cost/fee estimates are crystal clear (to the extent possible) so that surprises are avoided further down the line. This is in my opinion key to getting the most out of external counsel and ensuring a fruitful relationship based on mutual trust.     

Have any new laws, regulations or judicial decisions greatly impacted your company’s business or your legal practice?

As far as the Norwegian oil and gas sector is concerned, it is well regulated through multiple laws, regulations, guidelines, model contracts, production licenses with associated joint operating agreements, consents and permits. In sum, the regulatory regime is sophisticated and stable, and has gradually developed over time, also with input from industry through “hearing rounds” prior to introducing new legislation. However, there will always be legislation and judicial decisions which may impact our company’s business or may clarify the interpretation of a certain piece of legislation or contract. For example, to mention two recent decisions: A judicial decision involving the interpretation of risk allocation in a drilling contract; and the Gassled case (questions about tariffs in a gas pipeline transportation system). There is also focus from the authorities’ side on ensuring fair tariff arrangements for third party users of existing offshore infrastructure, based on resource management considerations.   

Looking forward, what technological advancements do you feel will impact the role of in-house legal teams in the future the most?

I think we probably will see more use in the future of “machine learning” and “artificial intelligence”, including within due diligence processes, although it’s still early days. I think in our day-to-day work, the availability of our “legal tool box” in terms of having user-friendly e-access at our fingertips to legal literature, legal commentaries, laws and legislation, white papers etc. is really a giant leap forward. And these tools are being gradually developed and improved as we speak. In the same vein, e-signatures also make life easier for in-house lawyers.
 
What can law firms do to improve their services to the legal department?

The clear point of departure is that law firms need to have intimate knowledge about our industry and its regulatory and contractual framework. For example, it doesn’t help much to be an expert in general contract law if you are not familiar with the context, particularities and the “legal drafting” or language of oil and gas contracts. Law firms should also be mindful of the external environment in which the companies operate, particularly in terms of the volatile price environment, the political environment and cost challenges. It’s therefore important that external counsel buys into this reality and offer services with competitive rates and/or other fee arrangements consistent with the reality experienced by their clients.  

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What is lost in translation

Due to the global nature of the oil and gas industry, many of us, as “industry lawyers”, communicate and draft contracts in the English language. This represents a “legal drafting” challenge, not only for Norwegian lawyers, but also for lawyers with English as their mother tongue. I think we, or at least some of us, could benefit from improving our English legal drafting skills – to aim for good drafting, boiling down to balancing simplicity and precision. It is also worth reflecting on the use of “boiler plate clauses” and other English law inspired clauses in English language contracts governed by Norwegian law.