In addition to continued warmer weather and droughts expected across the UAE region over the coming years, attributable in part to a changing global climate, the region is also expected to see a rise in sea levels and an increase in the frequency of storms.
The potential physical impact to oil and gas infrastructure and operations as a result, particularly in an offshore environment (which can be harsh and unpredictable at the best of times), is well recognised throughout the industry. Against this backdrop, we consider the concept of weather downtime and a possible shift in how the concept is being addressed by contracting parties.
What is weather downtime?
Weather downtime is a concept often found in construction contracts, applicable to periods typically described in the contract as 'periods of temporary delay or interruption to the performance of works and/or services caused by the occurrence of adverse weather conditions'. When it comes to non-routine offshore operations (such as transportation and installation), weather downtime is a key issue during contractual negotiations, and often a contentious one. This is perhaps largely due to the historical expectation that, when weather downtime occurs, the construction contractor will absorb all associated risk. When assuming such risk, the contractor can only manage and mitigate it by familiarising itself with all prior weather and wave conditions at the relevant site in order to forecast the future risk of downtime, and to include this weather downtime forecast as part of its proposed price in its commercial bid. Such an approach heavily favours the project owner over the contractor.
Oil and gas industry stakeholders are increasingly turning to innovative technology and AI to support their operations, including the use of advanced weather prediction and forecasting tools to gather live and accurate Metocean data. However, despite such efforts, accurately predicting weather downtime comes with considerable challenge and uncertainty (and climate change is believed to be making this task even more difficult). To the extent this uncertainty is caused or exacerbated by climate change, this will tend to give rise to more contention between the parties in respect of weather downtime because the contract will ordinarily exclude the possibility of a contractor variation request in respect of any actual downtime experienced (on the basis the contractor has priced this into its commercial bid already).
Sea of change?
In light of such contention, and perhaps as an indirect result of changing climates globally, we are encountering situations on a more frequent basis where contractors are resistant to adopting the historical approach to weather downtime discussed above. Instead, in our experience, contractors are now more often insisting on a shared approach to the risks associated with weather downtime and are unwilling to accept the full risk.
Marine Warranty Surveyors
It is also worth noting that contracts including the concept of weather downtime will almost certainly likewise include a contractual obligation to engage with an independent third-party Marine Warranty Surveyor (MWS). Usually appointed by the project owner and acting in the interests of both the assured and the insured, the primary role of the MWS is to assess the risks associated with offshore construction operations, and to prevent, manage, and minimise such risks to avoid, insofar as possible, the occurrence of any costly incidents, accidents and downtime.
This is a key consideration, as the MWS will, in essence, have the power to cease and/or interrupt operations, ultimately affecting the achievement of key target milestones without providing the contractor with the ability to recover any costs associated with MWS downtime decisions. Interfacing with an independent third party MWS has become an integral part of non-routine offshore operations and represents an additional consideration that contractors are generally expected to take into account when preparing final commercial bids.
There may however be light at the end of the tunnel, and project owners are now recognising that the additional risk of weather downtime may be considered a shared risk between the parties, rather than solely a contractor obligation. It still remains largely a project decision and will depend heavily on the duration of the offshore campaign and the complexity of the project, but it does appear, at least, that project owners are willing to acknowledge the risk.
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