At its last formal meeting during the Trump administration, the US Federal Energy Regulatory Commission opened a Notice of Inquiry to determine whether to impose financial assurance requirements on hydropower licensees and, if so, what those financial assurance requirements should be.

Please read the Legal Update at the link below.

https://connect.mayerbrown.com/392/7938/compose-email/us-energy-regulator-considers-financial-requirements-for-hydropower-projects.asp?sid=blankform

In December of 2020, the US Internal Revenue Service issued final regulations on like-kind exchanges under Section 1031 of the Internal Revenue Code of 1986, as amended. The Final Regulations, which generally apply to exchanges beginning after December 2, 2020, provide much-needed clarity for natural resource-related assets.

Please see Legal Update at the link below:

https://connect.mayerbrown.com/392/7936/compose-email/final-like-kind-exchange-regulations-contain-much-needed-clarity-for-natural-resource-related-assets.asp?sid=blankform

cybersecurity imageOn January 26, 2021, members of the Mayer Brown cybersecurity and data privacy practice will be joined by members of Dragos—a leading industrial security firm—to describe practical steps that members of the energy sector—and other relevant businesses—can take to mitigate cyber risks to operational technology. The webinar – Managing OT Cyber Risk: Lessons from the Front Lines – will discuss how legal teams can work with other stakeholders in their businesses to manage associated legal risk.

The energy sector faces significant and growing cyber threats. In particular, many businesses in the energy sector operate safety critical machinery that is increasingly connected—and subject to cyber attacks. Whether located on an oil rig, in the electric grid, at a refinery, or on a pipeline, these systems—often referred to as “Operational Technology” or “Industrial Control Systems”—sit at the backbone of countless critical processes in the energy sector. Cyber threats to these systems continue to grow, including from highly sophisticated nation-state actors. Potential attacks against these systems threaten to stop production, impair the integrity of safety-critical systems or even cause physical damage or personal injury. The corresponding legal risks facing the energy sector, whether from litigation or regulatory action, are equally significant and will continue to grow in the coming years.

Continue Reading Operational Technology Cyber Risk in the Energy Sector

Although the incoming Biden administration has put forth bits and pieces of a variety of potential tax reforms and incentives, two focus areas have clearly emerged—a reduction or rollback of certain provisions of the 2017 Tax Cuts and Jobs Act and a focus on clean energy and reducing carbon emissions (while promoting US-based manufacturing). Policy initiatives, as aspirational concepts, and the ability to effect tax reform are distinct topics; however, taxpayers ought to have an understanding of what is potentially at stake, which this Legal Update discusses.

The full Legal Update is at the link below

https://connect.mayerbrown.com/392/7930/compose-email/potential-energy-tax-changes-under-a-biden-administration.asp?sid=blankform#

 

On January 18, 2021, the Energy Regulatory Commission (Comisión Reguladora de Energía, “CRE”) published in the Official Gazette of the Federation (Diario Oficial de la Federación, “DOF”) a resolution suspending again all deadlines and terms of actions and procedures before the CRE.

In a manner similar to the last suspension resolution, the suspension will be effective from today, January 18, 2021, until the date on which the health authority of the federal government or authorities of Mexico City determine that it is possible to resume activities of the Federal Public Administration.

The suspension period will be considered non-business days and, therefore, any type of action or procedure before the CRE must be carried out on the first business day following the date of the resolution establishing the resumption of the terms and deadlines. This date is unknown at this time. However, please note that CRE will continue receiving briefs, notices and reports on Tuesdays and Fridays between 9:00 and 13:00.

On a separate but related matter, on January 15, 2021, the Ministry of Environment and Natural Resources (Secretaría de Medio Ambiente y Recursos Naturales, “SEMARNAT”) also uploaded a draft resolution to the National Commission for Regulatory Improvement (CONAMER) website to again suspend the terms and deadlines of actions and procedures, in a similar manner to CRE. If the resolution is published, SEMARNAT and its decentralized administrative entities, including the Security, Energy and Environment Agency (Agencia de Seguridad, Energía y Ambiente, “ASEA”), would again suspend terms and deadlines indefinitely.

 

Energy Voice has recently published an article written by Mayer Brown on potential restructuring options for oil companies in the UK.

Whether dealing with failure of a major project, reacting to crises at counterparties or weighed down by oil price weakness, many companies in the oil sector will have to undertake financial restructuring in 2021.

Click here to read the article.

On December 21, 2020, the National Agency of Petroleum, Natural Gas and Biofuels (“ANP”) published (i) Resolution No. 835/2020, which extends the effective term of certain ANP resolutions with measures related to the public health emergency situation caused by COVID-19 (“Resolution No. 835”), and (ii) Resolution No. 836/2020, which defines the procedures to be followed by entities regulated by the ANP that perform oil and natural gas exploration and production activities, also in consideration of the COVID-19 situation (“Resolution No. 836”).

Continue Reading Brazil’s National Agency of Petroleum Publishes Resolutions Maintaining Measures Related to COVID-19

On January 6, 2021, the US Internal Revenue Service (the “IRS”) issued final regulations (T.D. 9944) (the “Final Regulations”) on the Section 45Q carbon capture tax credit (the “Carbon Credit”). The Final Regulations implement numerous provisions of the proposed regulations (REG-112339-19) (the “Proposed Regulations”) that were issued last year but contain certain investor-friendly changes and additions. Key changes that ought to be well received by investors include (i) reducing the recapture period for the tax credit to three years (from the Proposed Regulations’ five years), (ii) permitting aggregation for purposes of meeting minimum capture requirements (which would benefit smaller carbon capture facilities), (iii) providing clarification with respect to the definition of carbon capture equipment and (iv) detailing standards and other information regarding “secure geological storage.”

Please see full article at https://mayerbrown.admin.onenorth.com/en/perspectives-events/publications/2021/01/irs-issues-final-carbon-capture-regulations

In a speech on 24 November 1992, marking her Ruby Jubilee on the throne, Queen Elizabeth II said, “1992 is not a year on which I shall look back with undiluted pleasure. In the words of one of my more sympathetic correspondents, it has turned out to be an annus horribilis.”

Annus horribilis. This is a moniker that oil and gas insiders might well apply to 2020 given the disastrous effects on the industry from Covid-19 pandemic (“Pandemic”) and its accompanying recession which brought a precipitous fall in demand and price. Indeed, in May the price of crude oil briefly went negative for the first time in history. This was followed by massive layoffs across the board and sharply curbed investments in planned and ongoing projects. Several major oil companies announced profound changes in their long-range focus from hydrocarbons to greener energy.

Brazil’s oil and gas industry was by no means immune from Covid-19´s fallout. In a June 29 communique, the Brazilian Petroleum Institute (“IBP”) predicted that the negative effects of the pandemic would last through the end of 2021. In addition, the pandemic returned Brazil to recession after three years of modest recovery. Despite this adversity, the Brazilian oil and gas sector, led by a proactive National Petroleum Agency (“ANP”), managed to largely maintain focus on long-term industry goals, benefiting from certain short-term regulatory relief discussed below.

Continue Reading When the Going Gets Tough the Tough get Going: Brazil Oil & Gas Thrives Despite the Pandemic

 

2020 was a fascinating year for all lawyers in the global oil & gas sector.

Over the year we had some brilliant speakers leading discussions with industry lawyers through our oil & gas lawyers’ forum – click on this link to see what we discussed.

Our sessions usually take place on Wednesday mornings (UK time) with invitations and topics circulated in advance. We’re very much looking forward to you joining us in 2021 as we examine important topics affecting energy companies.

Please contact the authors of this post if you are interested in learning more about the Forum.