How relevant will LOGIC Contracts be for Energy Transition?

As a dyed in the wool oil & gas commercial contracts lawyer, I know LOGIC contracts inside out, back to front and upside down.

I have also been advising on, amongst others, contracts in offshore wind projects of late.  These contracts tend to be based on LOGIC (or very similar) or FIDIC.

LOGIC or FIDIC?

In the absence of a recognized standard template contract or suite of contracts in offshore wind, there are different reasons for applying either LOGIC or FIDIC.

LOGIC:

• is designed with the hostile, offshore environment that is the North Sea
• many of the parties involved will be familiar with the provisions and the make-up of these contracts
• the different variations on the standard can be applied to different points on the supply chain (e.g. product supply, offshore services, heavy plant, etc.)

FIDIC:

• is frequently used for onshore renewable projects
• many of the parties will, again be familiar with this standard

There are pitfalls to be considered when applying either of these approaches to offshore wind projects or other offshore energy projects:

• neither LOGIC nor FIDIC standards were designed specifically for offshore renewables
• LOGIC contracts have heavy emphasis on pollution liabilities which will often be unnecessary in renewables contracts
• FIDIC is an “onshore” contract – it is not designed to be directly applied to an offshore environment – a good example being the detailed time programme and related conditions contained in FIDIC – these all have to be heavily modified to allow for realistic weather delays.

Conclusion

If I had to choose one over the other, I would opt for LOGIC because it has been designed with the offshore environment in mind.  However, I think a more balanced approach might be more appropriate – one that uses elements of both LOGIC and FIDIC to create a properly fit for purpose contract in each case.

Until such time as a suite of standard contracts in the spirit of LOGIC is created, this feels like the best approach.

If you would like further information on the topic discussed in this blog, please contact Calum Crighton by email: ccrighton@gilsongray.co.uk or by phone:

01224 011687 / 07841 920101. You can also view Calum’s profile by clicking here.