Mediating International Oil & Gas Disputes - Chapter 26 - Leading Practitioners’ Guide to International Oil & Gas Arbitration

Author(s):

Gary McGowan

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16 pages

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Published:

August, 2015

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Originally from The Leading Practitioners' Guide to International Oil & Gas Arbitration

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I. INTRODUCTION

The term “oil and gas” covers a broad range of subject matter,

ranging from finding liquid and gaseous gold in the deep earth (and

under deep water) to selling gasoline at the retail pump. The industry

began in earnest some 115 years ago and quickly became the primary

source of fuel worldwide for manufacturing, transportation, power

generation, and home heating. Additionally, crude oil refining has

spawned the creation of thousands of chemicals used to produce tens

of thousands of products, such as plastics, fertilizers, lubricants,

adhesives, and synthetic rubber. The contribution of the oil and gas

industry to the global economy has been enormous. It thus goes

without saying that the industry’s vast web of contractual

relationships generates thousands of international commercial

disputes every year. In the United States, and to an increasing extent

throughout the world, many, if not most, of those disputes are

mediated before proceeding to a hearing before an international

arbitral tribunal. Given the subject matter of this book, this chapter

will focus on the mediation of international commercial oil & gas

disputes that are subject to arbitration.

Generally, the basic mediation dynamics for mediators and

counsel do not vary significantly according to the subject matter of

the dispute or where in the world the mediation is conducted. Thus,

mediator and advocacy skills employed in an international oil and gas

mediation are essentially the same as those utilized in a U.S. domestic

banking dispute. Nevertheless, some differences are worth noting.

First, the industry has its own colorful lexicon and obscure

acronyms—”spud,” “cracker,” “swab,” “override,” “farmout,”

“fracking,” “pig,” “blind,” “turnaround,” “jack-up,” “semisubmersible,”

“west gas,” “price reopeners,” “mud,” “JOA,” “LNG,”

“FPSO,” “MMboed,” “MWD,” and “AFE,” to name only a few.

Mediators and counsel suffer a serious disadvantage when they do

not know the lingo of the oil and gas sector at issue. Samuel Taylor

Coleridge correctly observed: “Language is the armory of the human

mind, and at once contains the trophies of its past and the weapons

of its future conquests.”

Second, and more important, understanding the basic methods,

apparatus, and business of the industry sector—exploration, drilling,

production, gathering, processing, LNG liquefaction and gasification,

transportation and sales, or refining—can be essential to assisting
evaluation of disputes in those areas.