On Monday 14 August 2017 Holgate J. handed down judgment in Dean v Secretary of State for Energy  EWHC 1998 (Admin).
This was a judicial review of a deed of variation made between the Secretary of State for Business, Energy and Industrial Strategy, and three companies, including Dart Energy (West England) Limited (“Dart”), who together constitute the licensees.
The Claimant sought to quash a deed dated 28 June 2016 which varied a Petroleum Exploration and Development Licence (referred to as “PEDL 189”) granted under section 3 of the Petroleum Act 1998 (“the 1998 Act”) on 3 September 2008.
The effect of the 2016 deed of variation challenged by the Claimant was to increase the Initial Term from 8 to 10 years and to reduce the Second Term from 3 years to 1 year. The Production Period and the overall duration of the licence remained unaltered.
The Claimant submitted that in agreeing to enter into the 2016 deed of variation so as to alter the length of the Initial Term the Secretary of State acted ultra vires. The Claimant says that a licence granted under section 3 of the 1998 Act, such as PEDL 189, is a purely statutory licence. The 1998 Act is a complete statutory code governing such licences. It gives the Secretary of State an express discretion as to what terms or conditions to include in the initial licence, including provisions which may allow subsequent variations to be made to the licence. However, the 1998 Act does not itself confer on the Secretary of State any power to make a variation in the terms of a licence once it has been granted.
The Judge rejected the claim ruling (at para. 132) that:
“ … a licence granted under either the 1934 Act or the 1998 Act is not governed entirely by the statutory code relating to such licences. Rather it is a grant of exclusive rights to search for, bore and get petroleum, in other words a grant of exclusive property rights, which contains the normal incidents of property ownership, in so far as they are not excluded or modified by the terms of the legislation or the relevant licence. Those rights include the right to assign the interest created by the licence and the ability of the parties to the licence to agree to vary its terms. Neither the legislation to which the Court has been referred, nor the terms of PEDL 189, prohibited the variation which was made by the deed dated 28 June 2016. For all these reasons, that variation was lawful.”
The judgment can be found here.
James Maurici QC acted for the Interested Party Dart, instructed by Eversheds Sutherland and made written submissions: see paras. 2 and 143 of the judgment.