UK oil and gas industry regulator Oil and Gas Authority (OGA) has revealed that it has launched a year-long UK Continental Shelf (UKCS) “mediation pilot”.
According to the OGA, the pilot aims to test the extent to which mediation can resolve certain disputes between oil and gas licensees, operators and infrastructure owners in the UKCS.
The OGA has found that disputes have generally arisen due to entrenched licensee behaviors or communication breakdowns. They can be costly and time consuming for the companies involved, as well as threatening the delivery of MER UK.
While the OGA has a number of formal powers which can be used to resolve disputes, some matters could be better addressed by the parties themselves through mediation. Mediation is conducted by a neutral third party (unconnected to the dispute) who, unlike a judge in a court case, does not make a decision about the dispute but acts as a conduit between the parties, facilitating discussion, summarizing arguments and highlighting areas of agreement and disagreement.
The aim of mediation is to encourage parties themselves to resolve the dispute, rather than a decision being handed down to them by a judge (or indeed the OGA). This resolution could be done over a relatively quick time period, otherwise the dispute could continue for many months (and even years).
As part of this pilot, if the parties agree to mediate, the OGA intends to refer them to the Center for Effective Dispute Resolution (CEDR), an experienced third-party service provider who will facilitate the mediation.
If after the mediation, the parties still remain in dispute, then the OGA may, either at the request of one of the parties or on its own initiative, resolve the dispute using its formal dispute resolution powers.