UK Govt. publishes new Collaboration Code of law in its Strategy for Maximising Economic Recovery in the N. Sea

The 2016 UK Oil and Gas Collaboration Conference – Aberdeen 14 April 

The UK government has today laid its Draft Maximising Economic Recovery (MER) Strategy for the North Sea before parliament.

The MER UK Strategy will be an important document for the OGA. It is a legal document, which sets out the boundaries of people’s obligations and provides a framework for the OGA as it carries out its role. 

It will be voted into law under the Energy Bill – assuming the government’s parliamentary majority holds – some time between now and Thursday, 11 March 2016.

House of Commons logoFor the avoidance of doubt (as m’learned legal friends like to say) Paragraph 28 (the ‘Collaboration Code’) of the Draft Maximising Economic Recovery (MER) Strategy expressly states:

When considering how to comply with obligations arising from or under this Strategy relevant persons must:

  1. where relevant, consider whether collaboration or co-operation with other relevant persons and those providing services relating to relevant functions in the region could reduce costs, increase recovery of economically recoverable petroleum or otherwise affect their compliance with the obligation in question;
  2.  where it is considered possible that such collaboration or co-operation might improve recovery, reduce costs or otherwise affect their compliance with obligations arising from or under this Strategy, relevant persons must give due consideration to such possibilities; and
  3.  co-operate with the OGA.

Deirdre Michie, Oil & Gas UK Chief Executive, commented: “We welcome the speed with which the OGA has published its MER UK strategy to promote collaboration and maximise economic recovery of the UK’s oil and gas, following consultation with industry.” 

The MER Strategy also says that:

  • All stakeholders should be obliged to maximise the expected net value of economically recoverable petroleum from relevant UK waters, not the volume expected to be produced;
  • Compliance with the Strategy is intended to lead to investment and operational activities that, on an expected basis, add net value overall to the UK;
  • Compliance with the Strategy may oblige individual companies to allocate value between them, matching risk to reward. However, while the net result should deliver greater value overall, it will not be the case that all companies will always be individually better off;
  • Compliance with the Strategy will not lead to any individual company investing in a project or operating existing assets where there is not a satisfactory expected commercial return on that investment or activity. Such a return does not necessarily mean a return commensurate with the overall corporate return on their portfolio of investment, e.g. a low risk investment could give low returns; and
  • In determining whether something is consistent with the principal objective the OGA will need to balance the benefit of economic recovery of petroleum with the need to maintain the confidence of new and current investors to invest in exploration and production of petroleum from relevant UK waters, taking into account market conditions at the time of making its determination.


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