Nordisk Skibsrederforening

Nordisk offshore and energy - an overview

At Nordisk we have been engaged in the offshore sector ever since the early days of exploration in the North Sea in the late 60s and early 70s. Many of the drilling rigs involved were ordered by existing shipping members and drilling activities were supported by offshore support vessels (OSVs), albeit rather less sophisticated OSVs than the OSVs we typically see today. Following a number of significant discoveries, the start of production in the North Sea created new demands for maritime services. Subsequent technological developments enabled exploratory drilling at gradually increasing depths, in turn leading to deepwater production through the use of floating production units (FPSOs) and ever more sophisticated subsea installations. These new production methods have created a demand for a range of vessels and units to provide the maritime services required, and the Norwegian maritime cluster has shown a remarkable ability to cope with these demands and put itself at the forefront of developing  sophisticated vessels and maritime services.

Another well-known development has been the success of Norwegian maritime service providers in exporting their offshore expertise to virtually all other areas of the world. Norwegian companies are now leading providers of maritime services to the offshore sectors in Brazil and Australia, as well as in other parts of the world. In addition to the gradual development of the offshore oil and gas sector, more recently we have seen a growing trend towards developing renewable energy offshore. Several offshore windfarms have been commissioned over recent years and a number of others are in the pipeline. This has created a need for specialized vessels first to install foundations on the seabed and then the actual wind turbines. Thereafter vessels are required to maintain the installations on a regular basis. Accordingly a new market has emerged in which our offshore members are well positioned to participate.

As the trends noted above had led to a gradual increase in the volume of offshore-related work at Nordisk, some six or seven years ago we decided to establish an internal group of lawyers who would focus particularly on the offshore and energy sector. The Offshore and Energy Group now accounts for 10 lawyers, including three of our English lawyers (see the list on the back page). The number of offshore vessels and units entered with Nordisk is now close to 600, and as for Norwegian shipping in general, the offshore sector shows a growing trend contrary to many other areas of shipping.

Although the lawyers in this group focus particularly on offshore-related issues and the members engaged in this sector, there is no Chinese wall between this group and the lawyers dealing with “traditional” shipping work. While it is true that some lawyers in the group work almost exclusively on offshore and energy cases, others handle a significant number of cases in other areas of shipping.

The bulk of our activities in the offshore sector relates to case-handling for our members. This includes day-to-day advice on issues arising in connection with the operation of offshore vessels and units, such as contractual issues between owners (Contractor) and charterers (Company). For OSV members in particular, contract reviews are important and we review and comment on a large number of contracts every year. These include tenders by oil companies where several of our members may be among the bidders. In these cases we normally provide the same comments to all members involved.

Occasionally contractual disputes under OSV charters or drilling or FPSO contracts etc. have to be pursued in arbitration or before the courts. In such circumstances we assist our members in handling the proceedings. Court cases and arbitrations in Norway are handled by our Norwegian lawyers, but we also handle a significant number of arbitrations and court cases in the UK and Singapore, as well as in the US. English and American lawyers now account for about half of our legal staff, enabling us to handle many of these cases in-house. With offshore activities now taking place in many different countries, sometimes it is necessary to accept contracts governed by local law and jurisdiction. We handle any disputes that arise under such contracts with assistance from our worldwide network of lawyers.

Notwithstanding the strict safety requirements in most areas of shipping, unfortunately accidents do happen and the offshore sector is no exception. While damage to, or total loss of, vessels and units will typically be covered by other insurance – with matters tending to be simplified by the knock-for-knock indemnity regimes used in offshore contracts – we do sometimes become involved in major accidents in order to safeguard our members’ interests. Two tragic examples have been the disastrous capsize of the Alexander Kielland drilling rig in 1980 and more recently the capsize of the AHTS Bourbon Dolphin in 2007.

A number of our offshore members require legal services outside the scope of what is covered by Nordisk membership. In recent years we have accordingly expanded our transaction-related services quite significantly. As a result we have assisted in establishing new offshore companies in Norway on behalf of foreign interests and we regularly assist members and other clients with transactions such as mergers and acquisitions, sale and purchase of offshore vessels and units, sale-leaseback and financing. This trend of increasing demand for services outside our traditional cover seems be continuing among our offshore members.

In addition to our case-handling work, we are involved in various other activities of interest to our offshore members. We now seek to arrange an annual offshore seminar for our members, normally at one or two locations on the west coast of Norway. Our Singapore office also arranges offshore gatherings in Singapore for members and clients at regular intervals. Our lawyers are also frequently invited to give presentations at offshore-related seminars arranged by institutions such as Lloyd’s Academy and BIMCO in London and elsewhere, as well as at similar events in Norway. Moreover, we have been represented for a number of years on the BIMCO Documentary Committee, as well as on a number of BIMCO working groups, drafting offshore-related documents such as Supplytime and – at the time of writing this article – clauses related to the Maritime Labour Convention 2006 (see separate article). Our work in this area also includes contracts and documents that are used in, but that are not specific to, the offshore sector, such as Newbuildcon, Poolcon, Saleform etc. Finally, we have for a number of years been engaged in the work of CEFOR (the Nordic Association of Marine Insurers) in various capacities, including participation in the CEFOR Energy and Offshore Group and the working committee drafting the new Chapter 18 (Insurance of Mobile Offshore Units) of the Nordic Marine Insurance Plan 2013 (see separate article).

Overall we have seen very significant and strong growth within the offshore and energy sector. With most indicators suggesting that this is likely to continue, our offshore members are well placed to maintain and perhaps strengthen their position within this sector worldwide. As they do so we have every intention of continuing to play a significant role in this segment and look forward to assisting our members further in the years to come.