Contracting for Innovation: Adapting Agreements for Emerging Offshore Energy Technologies

The offshore energy sector is witnessing unprecedented technological advancements, from floating wind turbines to carbon capture and storage (CCS). While these innovations promise significant benefits, they also introduce new complexities in contracting.

Addressing Intellectual Property (IP) Concerns

Emerging technologies often involve proprietary designs or patented processes. Contracts must:

• Protect IP Rights: Clearly define ownership of innovations developed during the project.
• Technology Transfer Provisions: Balance collaboration with safeguards against IP leakage.
• Confidentiality Agreements: Prevent unauthorized disclosure of sensitive information.

Tailoring Performance Metrics

Traditional performance metrics may not apply to cutting-edge technologies. Considerations include:

• Customized KPIs: Define benchmarks that reflect the unique capabilities of new technologies.
• Pilot Testing Clauses: Allow for iterative testing and refinements without penalizing early-stage failures.
• Scalability Provisions: Plan for the expansion of successful pilots into full-scale deployments.

Managing Risk in Uncharted Territory

Innovative projects inherently carry higher risks. To address these:

• Collaborative Risk Sharing: Use joint ventures or alliances to distribute risk equitably.
• Incentive Structures: Encourage innovation with milestone-based payments or bonus clauses.
• Insurance for New Risks: Ensure coverage for emerging risks, such as cyber threats or unproven materials.

Conclusion

As the offshore energy sector embraces technological innovation, contracts must evolve to address the unique challenges and opportunities these advancements present. A thoughtful approach towards creating well-crafted agreements can help in driving innovation while protecting stakeholders.

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The information and opinions contained in this blog are for information only.  They are not intended to constitute advice and should not be relied upon or considered as a replacement for advice.  Before acting on any information contained in this blog, please seek solicitor’s advice from Gilson Gray.