Powering tomorrow Navigating the energy transition landscape 2024 - Flipbook - Page 28
Energy disputes:
Current trends
and what’s
coming next
As the energy transition progresses,
the norms and practices of the sector
are shifting, with new entrants, contract
terms, and regulatory structures. For
a capital-intensive industry with longterm project horizons, this moment
of transformation may be particularly
conducive to disputes.
Navigating contracts in a new United States
(U.S.) energy landscape
Many long-term energy contracts in the
U.S. were drafted and entered into in a very
di昀昀erent energy environment, well before
the country became a net energy exporter
in 2019, thanks to a surge in domestic crude
oil and natural gas production. As a result,
long-term contracts which were initially
structured to ensure delivery of oil or liqui昀椀ed
natural gas (LNG) into the U.S. now give
rise to issues of contractual interpretation, in
this novel context where the U.S. has become
an exporter.
Further, as the war in Ukraine has caused the
price of U.S. oil and gas to increase, the major
exporters have begun selling oil and gas to
those who would pay the highest prices, as
opposed to their established co-contractors,
leading to several complex, cross-border
arbitrations being initiated on these grounds.
Trends in European gas price reviews
In Europe, old generation long-term gas sale
and purchase contracts are gradually being
replaced by more modern agreements that
re昀氀ect the new European gas hubs, resulting
in fewer gas price review disputes, in contrast,
for example, to Asia which is facing a growing
number of these claims.
Band 1
Dispute resolution, Global:
Multi-jurisdictional
This is perhaps owing to the fact that
previously, buyers and sellers would have to
arbitrate the price as circumstances changed.
Now, however, with European hubs creating
more stable and reliable prices, there is less of
a need for such arbitrations, the price simply
tracking the index. It remains to be seen how
this trend will evolve over time.
Chambers Global, 2023
28
Hogan Lovells | Powering tomorrow: Navigating the energy transition landscape
