Conflicts of interest danger highlighted for new energy body

07 Jan

A planned new regulator of the UK's oil and gas reserves could face conflicts of interest in its work and "robust" measures will be needed to eliminate the risk, according to the Faculty.

Proposals for setting up the Oil and Gas Authority (OGA), with headquarters in Aberdeen, have been issued by the Department of Energy and Climate Change, and the Faculty has responded to a call for evidence about the plans.

The Faculty said that, given the broad remit envisaged for the OGA, it foresaw the possibility of conflicts of interest. There was scope for the OGA itself to be a party to disputes while at the same time having a dispute resolution function. It could be in dispute with A over a matter, and resolving a dispute between A and B over another matter.

Also, the proposals included a general power for the OGA to attend all industry meetings which could impact on the strategy, MER UK (Maximising Economic Recovery UK).

The Faculty stated that it did not oppose a power to attend meetings as such. It added: "Our concern relates to the need... for robust and effective management of the potential for conflicts of interest to arise.

"The issue arises where a meeting relates to matters which may subsequently engage OGA's dispute resolution function, anda fortiori where a meeting relates to matters which currently engage OGA's dispute resolution function. It seems to us that it would very seldom, if ever, be appropriate for a dispute resolver to have the right to have 'private' access to the deliberations of the parties to a dispute which it is resolving or may be called upon to resolve. Indeed we wonder how such a power could properly be exercised in practice.

"It seems to us that the power proposed may give rise to conflicts of interest (or at least the potential for conflicts of interest), may breach the principles of natural justice and may have human rights implications."

The Faculty added that there were potentially real difficulties "which must be considered in articulating not only the dispute resolution arrangements but also the powers of the OGA."

The full document can be viewed at OGAsubmission