The closest most of us get to the  global oil and gas sector is moaning about the price of petrol and the size of our latest Scottish Gas direct debit. Steven Raeburn took a trip up to the Granite City to speak to a number of leading lawyers who live and breath the global oil industry.

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It is perhaps not generally known that the oil capital of Europe was almost the northeastern fishing port of Fraserburgh.  The town’s deep harbour placed it in serious contention to be the onshore hub of the Scottish oil boom, when the black gold – source of such international grasping and bloodshed, still the keystone to the luxury lifestyle- was first sourced in the shallow North Sea.  However, Fraserburgh was overlooked in favour of its granite cousin, and nothing in Aberdeen has been quite the same since.

Helicopters buzz overhead as regularly as taxis, ferrying offshoremen to the fields where they undertake the invisible revolution of oil and gas production that we know goes on, which supports the city and spins off its economic side effects all across the world, but which is only ever seen by those involved.

The oil seeps everywhere, not least in the legal profession, where six firms based in the city have developed their specialism in servicing the particular needs of the oil industry, a client group whose needs are as varied and changeable as the weather that batters the platforms which scour beneath the ocean on the hunt for the source of all this lucrativity.  

Uisdean Vass, Scotland’s current Corporate Lawyer of the Year and head of Maclay Murray Spens’ oil and gas unit, explains that, unlike other recognisable practice areas, oil and gas work is unique and distinct, ranging from advising foreign governments, establishing property rights to explore and produce offshore, developing service agreements, production agreements, purchasing licenses and risk shifting for clients whose needs and possibilities change as rapidly as the evolving technology used to extract the product itself.  It makes for varied work.

“You always tend to think that what you do is not complex. But then again I have been doing it for 20 years,” he says.

“We are constantly evolving. The contracts will change with the technology and the oil price. I was in Venezuela during the 1990s when the contracts the companies were bidding for were going for exorbitant amounts, because oil was 25 dollars a barrel. Now it is over 100 dollars a barrel. The government was tearing up the contracts because they were too low. It is a very rapidly evolving discussion.

“New technologies hugely impact. We have an oil company client who specializes in a new EM technology, an electromagnetic process more advanced than seismic, which can only tell you what might be there. EM tells you how much oil actually is there. That impacts on the contract.”

It is doubtful that there is any other area of practice where the sands shift so frequently and with such little predictability. In most other practice areas, whilst habit and custom impact on day to practice, significant reforms usually follow a lengthy consultation process or Law Commission review, augmented by practice guidelines and style promulgated by the Law Society. Solicitors take comfort in the shared risk of uniformity and convention.  In this field, the chances of a technological breakthrough, an invasion or a currency devaluation causing a force majeure rethink are very far from remote. Fortunately, Vass says, the clients are of a breed not used to playing safe.

“There is very much an element of feeling your way. The one good thing is that you are in an industry which is also feeling its way, and an industry that needs to have quick decisions; an industry that is willing to take risks,” he says.

“It is against that background, which is in the one sense comforting, but in the other sense puts you on the edge of the precipice. You need to have a dual education. You have to be top flight lawyer; you are dealing with the largest amounts of cash you will find in the Scottish market. You have to have the black letter law and be a good lawyer. You also have to develop a separate education at the hard end of oil and gas. Without becoming an engineer or holding yourself out as a technician, you have to have an understanding, to be a well educated layman and to see the picture.”

The economic trickle down theory was debunked years ago, and spin off benefits, as the Tesco model has shown, largely spin directly into the wallets of large corporations who ensure that every pretty penny goes anywhere other than into the local area. Nevertheless, with such a concentration of wealth in a small area, there is associated legal work to be attended to, and Vass believes that Central Belt firms are missing a trick by choosing to expand southwards, rather than north where the growth is tangible.

“It is significant, and driving in a highly significant direction. There are three or four major players in Scotland, and they are all Edinburgh and Glasgow. It is very hard to make radical growth in the central belt. The top four have gone to expand elsewhere, and London is obviously where they go. But it is not so easy. Aberdeen has great potential to grow in the UK, not just for Scotland,” he says.

Fraserburgh may still be rueing the day its harbour and city potential were passed over. In addition to the University, the oldest in the UK, Aberdeen’s Robert Gordon Institute of Technology has been upgraded to University status, and is a beacon to the industry.  Hotels are invariably full, and Aberdeen teens, like their Glasgow or Dundee counterparts in the days of imperial expansion, see the world brought tangibly and temptingly to their doorstep.

“It is very, very profound. It has injected this part of the world with American and continental influences, but very pro-business, can-do influences. It has created a can-do culture here in the northeast. It has created an economic situation where boys from the North East are flying out to Indonesia, to Mexico. It’s the ‘Empire of oil’,” Vass says.

“The oil industry has had a very positive influence. The key to the future is that, as North Sea oil production declines, we are able to continue carrying out international operations in the northeast. That means investing in the universities, and trying to make it very attractive to base businesses here. It is interesting to see the overall effect in the northeast. In terms of law it has drawn more competition. When you are dealing with large sums of money you need to have a crack legal practice, and it raises the standards right across.”

Over at city rival CMS Cameron McKenna, Norman Wisely agrees that the city has become a potent environment for legal professionals, with a challenging, thriving working culture.

“There are so many great opportunities in terms of what is going in Aberdeen generally. We have become full service. We are still doing all our energy and corporate work, but we do commercial property, employment law, litigation, health and safety. We are getting more of the local work that would have gone to London firm. It is worth our while to be up here doing the work at local rates. It is a great place to do business,” he says.

“There is so much going on. The credit crunch hasn’t affected the level of activity here. It really is a micro economic climate. No matter what else is going on in the Central Belt or even in the rest of the UK, Aberdeen is quite internationally focused. Work and business in Aberdeen seems to be a different market entirely.”

Wisely notes that business has ‘boomed’ in the last five years, a timescale not without significance in terms of geopolitical ripples in the oil industry. One UK oil professional who has worked in Houston and Austin told The Firm that the oil cartels that have tentacles into the White House planned from the outset of the Bush Administration to raise oil prices to over 100 dollars a barrel. Price rises and evolving extraction techniques look set to keep Aberdeen flourishing, even as larger oil producers expand their horizons elsewhere.

“There is a lot of energy business activity. The big oil and gas majors are looking abroad to bigger plays and bigger opportunities because it is not financially efficient for them to develop the remaining reservoirs in the North Sea. Smaller and medium sized oil companies are coming in and buying all the assets of the major players. We’re involved in all those deals,” he says, acknowledging that the five year surge most likely has its roots in ongoing developments in Iraq.

“The way the oil price has gone in itself has a knock on effect. Even with newsagents in Aberdeen who aren’t involved in the oil industry. I’ve certainly noticed an increase in activity. Interesting; it could well be connected.”

This time last year Aberdeen house prices outstripped those in Edinburgh, making it the second most expensive place to buy a house in the country. The city and its environs are witnessing the construction of new housing and office developments, all of which prosperity and buzz, Wisely acknowledges, may be linked to UK and US foreign policy in Iraq.

“Ultimately it could be connected to oil and energy. In every major international crisis where there is a war in an oil producing country it only increases oil prices and makes life more active in places where oil is still being produced,” he says.

David Laing, chairman of Ledingham Chalmers notes that the recent boom continues a trend that started from the onset of oil production off Aberdeen that has continued since the 1970s. It has, he argues, improved the skillsets of lawyers in the area, shifting from a trade of “glorified librarians” into sharp business lawyers.

“The movement in the residential property market in Aberdeen on the last thirty years has been driven by the mobility of people. The buy to let market is making exponential returns, partly because there has been a massive influx of labour. The change in how we have served the oil and gas sector has benefited all the other sectors. Our lawyers are now far more astute and aware, far more service focused,” he says.

“Working for companies like that really sharpens up your act. It is a completely different ethos. The clients are accustomed to getting instant service from city lawyers. Why shouldn’t they get it in Aberdeen? In the business law side we sharpened up our act in the 80s, so that by the 1990s we were able to compete. We had the opportunity to hold our own in big ticket transactions. There is nothing like working with people who are a notch above you to sharpen up your own perception. There has been a huge change in the way that we operate since I started in the 1970s.”

The energy –excuse the pun- in the profession is tangible, together with a sense of focus and a unique atmosphere that the whirring helicopters enhance, if not create, at least in part. The city centre is concentrated, but the periphery is huge; a sprawling nest of industrial premises, hotels and service companies.  For a population of less than a quarter of a million, the high visibility of foreign nationals is testament to the international activity for which the city is a hub. The real spin off benefits are not financial or commercial, but conceptual.

“People work 24/7, it never shuts down. That creates a sense of buzz,” says Laing.

“It was the exposure to oil in the early days that gave us the ability to look outside our own area. It has given us a wider perspective. You don’t get fazed by working with people overseas. The oil industry tunes you to doing that. That opens up the opportunities.”