Robin Storey, General Counsel and Company Secretary at UK natural gas producer IOG, speaks to In-House Perspective about working in oil and gas in 1990s Russia, fending off expropriation in Kazakhstan and helping IOG reach its first gas flow earlier in 2022.

For someone who says they just ‘fell into oil and gas’ as a trainee, Robin Storey’s career trajectory has been nothing short of remarkable.

From a chance seat in 1995 in one of the first international law firms to open its doors in Moscow, Storey was quickly plunged into the heady world of expat life in Boris Yeltsin’s Russia. ‘It was just prior to Yeltsin’s re-election [as Russian President],’ he says. ‘There wasn't much commercial activity, but the main law going through the Duma was the production-sharing law. It was clearly a key law for Russia’s economic development. All the law firms were focused on that, so overnight if you were involved, you became an expert in Russian production-sharing legislation and indeed Uzbek, Kazakh [production-sharing legislation] and anything else.’

While Storey may have fallen into Muscovite life, it proved to be a formative experience which gave him a taste for living and practising law abroad in largely uncharted former Soviet territories. ‘There were so few expats then in Moscow,’ he says. ‘You met everybody in one of the two restaurants where everybody went on a Friday night. It was a totally different world to now. It was a genuine frontier.’

As Storey neared the end of his training, he had the option to focus on construction law. However, an agency spotted his track record on production sharing agreements (PSAs) in the oil and gas sector and put him forward for a role to help UK oil and gas company BP broker the PSA to exploit the Kashagan oil field in the Kazakh sector of the Caspian Sea.

The oil major was part of a consortium of Western companies that also comprised Royal Dutch Shell, Eni, Mobil, BG and Total. ‘I was really a glorified legal bag carrier, but it was a really interesting start to my career,’ laughs Storey as he recounts the negotiations that took him from BP’s majestic townhouse in Mayfair, to even more grandiose venues in Milan, New York, Paris and The Hague. ‘There I was, a year or so qualified and involved in what I think was the biggest capital expenditure of any oil and gas project in recent years.’

The costs for developing Kashagan – one of the largest oil deposits ever discovered outside of the Middle East – swelled to an estimated $50bn as the project was beset by years of setbacks. Production finally began in 2013, by which point Storey had moved on to his third general counsel role thousands of kilometres away in London, illustrating just how challenging it can be to get projects off the ground in this industry.

After Kashagan, Storey’s next big challenge saw him return to Russia to assist BP in protecting its shareholding in RUSIA Petroleum, a joint stock company operating in eastern Siberia. He visited projects on site that were accessible either only by road in minus 30-degree temperatures or only by helicopter the rest of the year when the ice melted. It was an intense introduction to the world of shareholder disputes in Russia where so often business and politics – and oligarchs and Federal Security Service (FSB) agents – collide.

Over the next few years, Storey assisted BP in securing a PSA List Law for the Kovyktinskoye gas and condensate field – home to some of the largest gas reserves in eastern Russia – and progressed the Sakhalin IV and V joint ventures with Russian oil major, Rosneft.

Disputes and cultural clashes

Storey left BP in 2003 just as the TNK merger came on the horizon, but he already had his sights set on a new challenge in Almaty with PetroKazakhstan, a Canadian independent with listings in Kazakhstan, London, New York and Toronto and that had formed joint ventures with various Russian and Kazakh entities.

However, the company soon became embroiled in a series of disputes with the Kazakh government, and a company which owned a significant interest in a producing field. As the allegations spiralled, Storey suddenly found himself pursuing joint venture-based claims against the company related to production, the pipeline and refineries that spanned arbitrations in Stockholm, Paris and Amsterdam’s District Court.

Around 30 simultaneous cases were launched in courts in Almaty, Astana, Kyzylorda, Shymkent and other cities across Kazakhstan. Storey had a large team from Salans law firm assisting him on the cases and was forced to split the team across different cities to accommodate the complex courtroom schedule. He also recruited a handful of paralegals to manage the huge volume of documentation involved in defending the claims.

The time pressure exacerbated what were already challenging cases. ‘Whereas we’d get six months to respond on a significant filing in, say, Amsterdam, in Kazakhstan we’d get three weeks’ notice of a $250 million claim,’ he says. ‘A lot of the cases were mirror images of the arbitration and litigation claims in Europe. These were complex cases involving reservoir modelling to assess the movement of oil or economic modelling to justify the loss of production; projecting oil prices; appropriate discount rates and complex economics.’

Many aspects of the cases were out of his team’s control. On one occasion even the Kazakh elements intervened to challenge them. ‘The courtroom was tiny and it was maybe 40 degrees outside with no air conditioning,’ he says. ‘My translator fainted and we had to carry her into the judge’s office where we revived her. It was just surreal. The judge, like all judges in Kazakhstan, was wearing a maroon robe and a fez and once we resumed, the process – which probably would have taken considerably longer in Europe – was all over in a day.’

Storey says the main strategy was to appeal everything and hopefully buy the company enough time to find a willing buyer. After almost two years of fighting litigation, the hard work paid off. In October 2005, China National Petroleum Corporation acquired PetroKazakhstan for $4.18bn, marking the largest ever overseas takeover of a listed company by a Chinese state-owned entity.

The hard work wasn’t over for Storey, however. He says the takeover resulted in a clash of cultures, and the departure of numerous senior managers. He was one of the few expats kept on, but then was tasked with encouraging the majority of the former managers to return to Kazakhstan to give witness statements at arbitration. 

Surprisingly, he says it wasn’t that difficult to convince them to come and say their piece. ‘Whilst we’d been incredibly successful in returning cash to the shareholders, we all wanted to make the point that the company had been put into that situation by many, many wider commercial forces and everyone, from the chief executive down, came and testified,’ he says. ‘It was a really fascinating episode and we literally did stave off expropriation and then got the shareholders their money and transitioned it across to the Chinese. That was the first ten years of my career.’

Storm clouds gather

After Kazakhstan, Storey moved back to the UK with his young family to take up his first general counsel role at Stratic Energy as the AIM oil and gas market was really taking off.

It seemed a great opportunity, but by August 2008, when the storm clouds of the financial crash were already brewing, the company faced delays getting its West Don Project in the North Sea online amid a $50 million funding gap. Unfortunately, the team soon learnt that the company’s lender – what was then RBS – was facing its own ‘existential crisis’, says Storey.

‘I remember thinking I expected all of this in Russia and Kazakhstan,’ he says. ‘I didn’t expect to come back to the UK and watch RBS keel over in front of me. I’d literally come into the office and some mornings we just didn’t think we’d get through the day. It was really quite scary, but to their credit, RBS and the company were able to agree a bridging loan and forward plan.’

After successfully brokering three large divestments in Italy, Turkey and the UK to take most of the debt off the balance sheet, EnQuest emerged as a buyer for Yukon Territory-incorporated Stratic. Once again, Storey was in the thick of a takeover, with a shareholder vote in Toronto and then gaining court approval for the takeover in the Supreme Court of the Yukon Territory.

His next role as general counsel at Aurelian Oil and Gas, which was operating across Bulgaria, Poland, Romania and Slovakia, was no less challenging. After a disappointing flow test resulted in an overnight share price collapse in September 2011, Aurelian was forced to seek a takeover partner. Storey describes a ‘war cabinet environment’ as the company underwent three consecutive takeover processes, leading to the eventual takeover of the company by San Leon Energy in early 2013.

He was then snapped up by Equus Petroleum, a UK-incorporated company that was looking to exploit oil fields in Kazakhstan. This role was also not plain sailing. ‘The difficulty was we had a local operation that had to be compliant for AIM and Companies Act purposes now that it had a UK plc top co and was looking for an AIM listing,’ he says. ‘By this stage, the UK Bribery Act had also to come into force, which is an interesting point, because [by then] Kazakhstan also had its own anti-bribery and corruption processes, which, to be fair, were very strict. We had to dovetail the local requirement with the UK requirements as a matter of law, but then we also had to implement them in the company.’

However, Storey says once again that the cultural clash intervened. ‘We were all Russia and former Soviet Union experienced, so we knew what cultural issues we needed to accommodate and knew what we had to do, but you still need shareholder agreement to implement something that crosses those cultural barriers,’ he says. ‘We had one final attempt and symbolically met in Istanbul where East met West. We had one very good day and then the discussions collapsed. We realised we just couldn’t take this any further, so the chief executive resigned one day, I resigned the following day, and that was that.’

North Sea exploits

As if the first two decades of his career weren’t eventful enough, there was plenty more to come for Storey. He joined UK natural gas producer Independent Oil and Gas plc in January 2019, originally on a part-time consultancy basis, but it wasn’t long until he was appointed the company’s General Counsel and Company Secretary.

Since then, the company has rebranded as IOG and brought in financing via its joint venture partner CalEnergy Resources to exploit the Blythe, Elgood, and Southwark fields in the North Sea and succeeded in restructuring, upscaling and upsizing its workforce five-fold to around 40 employees.

For someone who knows all too well how difficult it is to get projects off the ground in this industry, Storey says IOG’s upward trajectory has been gratifying. ‘We were in pretty desperate straits and needed finance to restructure and keep going,’ he says. ‘We navigated what was a downturn in the industry to our advantage. We managed to recruit well and managed to procure at relatively low rates. Those bigger fish are no longer there to be fried, so therefore the smaller fields become opportunities for companies like us, if you’re fleet of foot and quick and you develop in the right way.’

In April 2018, IOG acquired what is now known as the Saturn Banks pipeline – which was previously used to transport gas from the Thames area complex – for just £1 plus decommissioning costs. Through Phase One and Phase Two of the project, the company plans to exploit a scattering of assets containing around 500 billion cubic feet of resources across the UK Southern North Sea.

Storey is still IOG’s only in-house lawyer, but he is supported by external counsel from Fieldfisher. Despite dealing with relatively small assets, he says that handling all of the processing and transportation agreements has been a wide-ranging and intense challenge. ‘Even if, in oil and gas terms, these are relatively small fields, it doesn’t mean that you don’t have the same kinds of legal work,’ he says. ‘We’ve done a hostile takeover defence, raising equity, bank working capital facilities and divestments and secured a Nordic Bond. We do employment. We do share schemes and gas sales agreements. The trick really is knowing how to use your experience to spot what’s essential and what’s not.’

In March, the company announced it had successfully delivered its first gas to the Bacton Terminal from both the Blythe and Elgood fields. It was a euphoric moment after various issues had posed delays to production earlier in 2022.

However, Storey says IOG’s progress has still been good in industry terms. ‘We developed in two and a half years and the North Sea average is three,’ he says. ‘In the scheme of things, it was pretty quick. Our contractors built two platforms in the Netherlands during this period then floated those across and connected them up to the extended pipeline. We’re now producing from Blythe and Elgood, and on location for the third well at Southwark. We’ve gone from being a microcap to being a material gas producer.’

The future of gas

IOG’s first gas flow couldn’t have come at a better time as the UK continues to face gas price hikes and the fallout from Russia’s invasion of Ukraine places increasing pressure on European energy supply chains.

However, like many companies, the war in Ukraine also forced IOG to review contracts it held with Russian-government entities. In July 2021, the company signed a gas sales agreement with Gazprom Marketing & Trading after a competitive tender process for equity production from its Elgood and Southwark fields. On 1 March, in a statement, IOG’s CEO, Andrew Hockey, said the company had served notice with ‘immediate effect’ regarding the contract after Russia’s ‘shocking, unprovoked invasion of Ukraine’.

After working so extensively in Russia, Storey had personally been following the situation nervously for some time. Despite it being just ten days before IOG’s projected first gas, he says the company was in no doubt about the course of action. ‘We’d kept it under review and obviously saw the situation in Ukraine and the governmental response to that and very quickly served notice on Gazprom,’ he says. ‘It was untenable to do business in this situation. Possibly the advantage of a small company is that you can corral the Board pretty quickly and take a decision.’

Storey then had to help manage a further competitive process to find a new buyer. On 11 March, IOG announced it had brokered a new agreement with BP Gas Marketing, which already had a reciprocal gas sale agreement for Blythe. ‘You wouldn’t normally have a situation where you have to do something different ten days before your first gas,’ he says. ‘We’d concluded around 30 agreements dealing with processing and transportation maybe a week before and then went straight into a new set of gas sales agreements. You have to move quickly in this world.’

As the international gas markets continue to be squeezed, Storey says stability is sorely needed. ‘The gas market was incredibly tight even before Ukraine,’ he says. ‘We saw it rise steadily, but then there’s been extreme volatility. You can’t sensibly assume these high prices will continue, and they may well for some time, but a steady state of affairs would be much better for everyone.’

Storey says projects such as IOG’s will be vital to ensuring the stability of the UK domestic gas market. The company estimates that Phase One alone could generate a lifetime saving equivalent to close to one million tonnes of carbon dioxide emissions versus a weighted average of UK gas imports.

He believes the company’s low-carbon approach, which includes re-using existing infrastructure, and its commitment to net zero Scopes 1 and 2, helps meet the UK government’s 2050 Net Zero emissions target, and will help secure the UK’s future gas supply. ‘It’s where the energy transition is going,’ he says. ‘This is critical domestic and low carbon footprint gas. It's secure, domestic gas at a time when we’re importing well over 50 per cent now. This gas is going to be significant for some time to come.’