Press Release

British oil and gas companies are now exempt from European procurement laws following a decision by the European Commission on 29 March 2010.

Following an application by Shell U.K. Limited, assisted by leading UK law firm Shepherd and Wedderburn, oil and gas companies in England, Scotland and Wales have been granted an exemption under Article 30 of Utilities Directive 2004/17. This means they do not have to follow the EU procurement requirements for competitive tendering of contracts intended to enable oil and gas exploration or production.

The application was based on the fact that the British exploration and production industry is fully exposed to competition as part of a global industry. This persuaded the European Commission that the British oil and gas industry need not be bound by EU procurement requirements.

Richard Cockburn, partner at Shepherd and Wedderburn, said: “This is excellent news for the British oil and gas industry. It is expected that most oil and gas companies will continue to use competitive tendering but the exemption from the EU's procurement requirements will allow a greater degree of flexibility, which is vital in a competitive global market."

Shepherd and Wedderburn was familiar with the mechanism for exemption, having drafted an exemption application for Britain’s energy generation industry in 2006 – the first such successful application in Europe.

Britain has followed the example of The Netherlands, which was granted an exemption for oil and gas exploration and exploitation in July 2009.

John Gallagher, Vice-President Technical – Shell Upstream International Europe, said: “We welcome the exemption and the benefits that it will bring to the British oil and gas industry. More flexibility will help everyone to make quicker decisions about how to allocate resources and respond to new opportunities. The principles of competitive procurement will continue to underpin the market because they make good business sense.”