Dean v The Secretary of State for Business, Energy And Industrial Strategy

A petroleum exploration and development licence granted under the Petroleum Act 1998 is a grant of exclusive property rights, not merely an instrument governed entirely by the statutory code. Unless excluded or modified by legislation or the licence, ordinary incidents of property and contract law apply. The parties may therefore agree a variation, including a variation of the Initial or Second Term, even without an express variation clause. The model clauses and the European licensing requirements did not prohibit that result, particularly where the overall duration of the licence remained unchanged. In the alternative, the power to grant a licence carried an incidental power to agree a consensual variation, provided no express statutory prohibition applied.

The claimant sought judicial review of a deed dated 28 June 2016 varying PEDL 189, a petroleum exploration and development licence granted under section 3 of the Petroleum Act 1998. The deed extended the Initial Term and correspondingly shortened the Second Term, leaving the overall licence duration unchanged.

The claimant argued that the licence was governed exclusively by statute, that neither the Act nor the licence authorised the variation, and that the Secretary of State lacked power to execute it on behalf of the Crown. The defendant and interested party contended that the licence was a contractual and proprietary grant capable of consensual variation. The central issues were whether the variation was ultra vires and, alternatively, whether the Secretary of State had an incidental power to agree it.

1. The claim was dismissed. The deed of variation dated 28 June 2016 was lawful.
2. A licence under section 3 of the Petroleum Act 1998 grants exclusive rights to search for, bore and get petroleum and enables the licensee to own and sell petroleum won. It is therefore essentially a property transaction, akin to a mining licence or lease, created by deed and containing ordinary incidents of property ownership.
3. The statutory origin of the licence did not exclude ordinary private-law principles. The licence was capable of assignment and of consensual variation. Neither the Act nor PEDL 189 prohibited altering the Initial Term, the Second Term or the Work Programme by agreement.
4. The model clauses in the 2004 Regulations were standard-form provisions which could be modified or omitted. Their failure expressly to provide for variation of the Initial or Second Term was not a prohibition. Section 5(5) to (7) and (9) of the Act also provided a strong indication that incorporated model clauses could be altered or deleted after grant.
5. The Directive and the 1995 Regulations concerned transparency and conditions during the procedure leading to the grant of a licence, and the overall duration of the licence. They did not prevent subsequent consensual changes to constituent phases where the overall duration was unchanged.
6. Alternatively, even if the licence were treated as governed entirely by statute and public law, the statutory power to grant it carried an incidental power to agree a consensual variation. That power was consistent with the licensing objective of facilitating economic recovery and responding to unforeseen circumstances, and no express prohibition applied.
7. The Secretary of State was entitled to execute the variation on behalf of the Crown. No express wording was required in the deed to state that capacity.
8. The court declined to determine formally the alternative issue under section 31(6) of the Senior Courts Act 1981, because the challenge failed on its merits.