Hindsight is 20/20.

By Laura Petrie, Partner at Brodies LLP

Never has a proverb been more appropriate than when considering an article that tries to look ahead to what might happen in 2021.

At the end of 2019 there were very few people, if anyone, who could have accurately foreseen how 2020 would play out. And as the end of the year approaches, how can oil and gas businesses use that hindsight to plan for the future?

Since the commencement of large-scale oil and gas production in the UKCS in the 1970s, the industry has faced various challenges, hardships, peaks, and troughs. The implications of harsh working environments, reliance on a finite resource and both national and international external market forces mean that those working in the industry are aware that downturns can occur all too rapidly. The last fifteen years have seen the industry move through various downturns with increasingly shorter periods between those dips, and yet, it is an industry that remains resilient, has adapted and in some cases, reinvented itself in response. 

With that in mind, and while COVID-19 continues to dominate the headlines, it is perhaps time to focus  on some of the positive developments the industry has seen throughout 2020, and how these might play out in 2021 and beyond.

People are Power

The energy industry relies on its skilled workforce, not just in terms of practical capability but in the asset knowledge that has built up over the years. During downturns the risk remains that skills and knowledge can be lost due to required downsising. Management of staff during a downturn provides a good opportunity for review of HR policies, employment processes and contracts, and also assessment of training and upskilling that may be required to ensure staff are best placed to support the business through harder times. Coordinating any such review comes with legal challenges to ensure that compliance with law and regulation is assured at every stage.

Transformative Technology

Historically, technology booms have followed periods of downturn and the expectation is that the years following 2020 will be no different. Employees and organisations have had more time to investigate new technology and develop existing ideas. The Oil and Gas Technology Centre has highlighted a rise in new concepts and ideas relating to digitalisation and low carbon technology aligning with a growing focus in the industry to be more energy efficient. Protection and commercialisation of new ideas requires significant legal input from an early stage to ensure that all rights are suitably preserved and any financial or technical support from third parties is suitably documented.

Diversifying out of the Dip

This year has shown that businesses can adapt and move quickly to address changing circumstances. In preparing for 2021, the industry has an opportunity to assess assets and business offerings and take the time to plan for adapting, diversifying or changing their approach. Having demonstrated that rapid change is possible, the hindsight gained from making those changes together with more time and opportunity to plan gives better scope to assess issues that may arise as a result of such changes. From a legal perspective this can include obtaining international legal advice, re-structuring or simply undertaking reviews and due diligence of existing contract terms.

With the skills and knowledge built during 2020 and previous years, and the benefit of hindsight,  the industry can prepare for a new chapter where it's people, technology and resilience will be central to the story.

Read the latest issue of the OGV Energy magazine HERE.