The OGA Strategy came into force in February 2021 and defines what is meant by the OGA’s legal duty to maximise economic recovery of oil and gas from beneath UK waters. The Claimants – three campaigners – argue that the definition given to “economically recoverable” ignores circumstances where the OGA is only able to maximise this revenue due to subsidies the sector receives from the UK Government.
The OGA Strategy is required under the Petroleum Act 1998, which also sets the statutory objective of “maximising the economic recovery of UK petroleum” (section 9A). By not considering the tax breaks given to oil and gas companies, the Claimants argue that the OGA Strategy frustrates the statutory purpose of the Act by allowing extraction that is economic to the operator but not economic to the UK as a whole (Ground 1).
The Claimants also argue that the adoption of the Strategy, including its definition of the term “economically recoverable”, was irrational because it will result in greater oil and gas production then would otherwise be the case, which directly conflicts with the UK Government’s legal duty to achieve net zero emissions by 2050 (Ground 2).
Mrs Justice Thornton granted permission on both grounds.
The Court was not persuaded that the Claimants lacked standing, nor that permission should be refused on grounds of delay - the Defendants had sought to argue that since the relevant parts of the “economically recoverable” definition had been adopted in the OGA’s previous strategy (2016) the challenge should have been brought to that earlier strategy, but the Court concluded that the 2020 consultation on the present strategy indicated that fresh policy choices in relation to the transition to net zero. The Court was also not persuaded, on the information before it, that any of the Aarhus cost caps for the Claimants should be raised.
The Claimants were given permission to rely on expert evidence, which seeks to explain the tax regime applicable to petroleum exploration and production activities in what the Court recognised to be a technical and complex field.
Merrow Golden acts for the Claimant, led by David Wolfe QC and instructed by Leigh Day solicitors.