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Norwegian Continental Shelf – a new dawn for EPC alliance contracts?

News | 11.10.17

Oil and gas
Oil companies on the Norwegian Continental Shelf is increasingly aiming to enter into alliance contracts to reduce costs in connection with oil field developments. In this article, published at International Law Office, Partner Trym Landa discusses some basic issues pertaining to alliance contracts.

Following the collapse of the oil price to below $ 30 developments of many oil fields on the Norwegian Continental Shelf was put on hold. The development costs combined with the low oil price implied that new developments would not be commercially viable. With the subsequent recovery and stabilization of the oil price above $ 50 one is getting to a price level where new developments will be financially justifiable. However, this require that the development costs are under control. To improve the control oil companies seek to enter into EPC alliance contracts to ensure an optimal planning and execution, and a different risk allocation then within traditional EPC contracts. The article focuses on issues pertaining to integrated organization, delays and defects, and risk allocation within alliance contracts.

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