Decommissioning Obligations in the Energy Industry: What is the Balance between Contractual Obligation and Reality?

Abstract

Abstract All stages of petroleum development involve a chain of obligations and residual rights which include issues ranging from real environmental concerns to public perception of performance. Events in contemporary times suggest that the ability to deal effectively with these issues will be the defining moment in the energy industry this decade. One obligation currently occupying the front burner is the decommissioning of oil and gas installations. Decommissioning, which is the process of physical removal and disposal of structures at the end of their working life, is particularly complex due to the unpredictability of its date and cost. It is, however, unavoidable. While legislative and contractual mechanisms are easily formulated, the reality of implementation remains the answer to success. This paper aims at analysing the existing international and other legal regimes applicable to decommissioning, while considering country examples and outcomes of contractual relations. It also discusses emerging t...