Despite the global nature of the survey, some common areas of concern emerged
CMS’s Oil and Gas Disputes Survey 2022-23
Which are the main dispute-related risks facing the oil and gas industry?
What do legal experts who work in the sector perceive to be the industry’s greatest risks?
The ongoing conflict in Ukraine and cost of living crisis have continued to mean energy generation is a critical topic this year
The oil and gas industry faces the challenge of providing energy security while also making reforms and investments to reduce carbon emissions in pursuit of Net Zero
At the same time, the sector faces pressure to keep energy prices lowRisk of disruption by climate change activists is an additional risk
The survey represents the views of around 80 industry professionals around the globe
Overview of key issues
High risk of disputes around energy generation from oil and gas in in UKCS and Latin America
Overall dispute risk in the rest of the world is perceived to be lower
Changing regulatory regimes are causing uncertainty
Changing regulatory regimes are causing uncertainty
Wind power generation currently seen as a lower risk for disputes - this may change as infrastructure matures
Decommissioning of hydrocarbon projects is highly contentious
Perception of dispute risk 2023
The four areas of greatest perceived dispute risk globally have remained
the same for the last three years, although the order has changed
Projects
Projects
Joint ventures
Joint ventures
Host states or regulators
Host states or regulators
Supply chain
Supply chain
2022
2023
Risk perceived within the industry
Host states or regulators
Supply chain
Projects
Joint ventures
7.5%
5%
7.5%
2.5%
low
22%
high
18%
32%
14%
19%
medium
15%
19%
21%
Regions where disputes are considered most likely to occur and change in risk perception
Risk perception % by year
2023
2022
36%
31%
15%
5%
May be influenced by increased court activity by UK climate campaign groups and perceived risks of energy transition
Continues to reflect consistent challenges identified as fluctuating prices and regulatory environment
May reflect in part the continuing conflict in the Ukraine
UKCS
(non UKCS)
Europe
Asia-Pacific
10%
10%
Latin America
20%
5%
Seems to reflect political and economic instability in the region (e.g., Peruvian recession)
Africa
16.6%
18%
Suggests continuing difficulties with governance and contracting discipline
Africa
18%
1.6%
Potentially linked to perceived increased political stability(e.g., Saudi-Iranian agreement)
16.9%
18%
41.7%
27.6%
% of participants who selected this risk type
Higher risk of disputes
Better management of supply chain/contractors
Better records
Joint ventures
Supply chain
Host states or regulators
Projects
Host states or regulators
Supply chain
Projects
Joint ventures
2022
2023
Supply chain challenges:
Risk management strategies
1
2
3
4
1
2
3
4
Strategy
Strategy identified for
Projects
Supply chain
Joint ventures
Host states or regulators activities
More than two thirds of respondents think that risk could be better managed.
Earlier engagement of in-house legal/external counsel
Suppliers under increased pressure
Skills and materials shortages in the manufacturing sector (especially in the renewable energy sector)
(non UKCS)
Europe
UKCS
Which regions are at greatest risk of disputes arising due to the transition away from oil and gas?
Transition to renewable energy
Lowest risk energy transition activities:
Highest risk energy transition activities:
41%
38%
Continuing hydrocarbon exploration and production
Early cessation of production /decommissioning of oil and gas infrastructure
Wind power generation
Gaining consent and authorisation for hydrocarbon exploration
Legal practitioners agree that proactive management and early engagement are the best strategies for tackling risk
The regulatory environment is shifting and uncertain
Climate change is increasing the risk of dispute and disruption in the oil and gas industry
How will you mitigate your dispute-related risk?
Projects and supply chain are seen as the highest risk activities
