FIDIC in the energy sector

FIDIC is today the most widely used standard form of contract in wind projects, and the contracts are also increasingly used in other types of energy projects such as oil and gas projects. Why should energy companies use FIDIC contracts?

Why should energy companies use FIDIC contracts?

Each FIDIC contract has its own scope of application and serves different purposes. An energy project will often involve contracts with different parties (e.g. cable and foundation suppliers and subcontractors) who must cooperate for the project to be successful. For this purpose, the FIDIC contracts, in particular the FIDIC Yellow Book, the FIDIC Red Book and the FIDIC Green Book, may prove useful when contracting across different types of work in an energy project. It may ensure consistency between the contracts, including in relation to interface issues and disputes.

The FIDIC contracts are also convenient in large energy projects with international bidders and in energy projects that involve construction activities abroad.
As an alternative to FIDIC, the parties may use model contracts for machine deliveries such as Orgalim. In that case, it is important to note that these contract terms are typically more “supplier-friendly”, and that many contractual processes are not regulated in detail.

Pitfalls of using FIDIC contracts in the energy sector

The FIDIC contracts were originally designed for international construction projects. Therefore, there will almost always be aspects of an energy project that are not taken into account in the FIDIC contracts.
When drawing up contracts in an energy project, it is therefore relevant to consider if the FIDIC contracts should be adapted to the specific project, including for instance:

adverse weather conditions
local regulatory requirements, including local content regulation
ownership of energy production during the test period
energy production warranties
ongoing service (can be dealt with in a separate service agreement)

In offshore energy projects, the FIDIC contracts need substantial adjustments, as they do not regulate the specific needs of offshore projects such as transport by sea and adverse weather conditions, being intended for onshore projects.

How can we assist your organisation?

Our FIDIC team has extensive experience in amending and negotiating all types of FIDIC contracts across sectors, including the energy sector, where we combine our in-depth legal knowledge of the FIDIC contracts with our extensive knowledge and experience from a rapidly changing energy sector.

We have many years of experience in negotiating FIDIC-based contracts (typically the Yellow Book) and adjusting them for energy projects involving, inter alia, procurement of onshore and offshore wind turbines and foundations etc, both inside and outside Europe.

Do not hesitate to contact us for a discussion of FIDIC.