POG220
The estimation made by the Decommissioning Report (2011) for UKs oil and gas concluded that about £30bn will be used within the subsequent thirty to forty years to cover UKCS decommissioning obligations and upwards of £3bn being sustained between 2012 and 2016.
This essay will look at the legislative structure which supports offshore decommissioning activity in the UK and Europe. How obligations are allocated, the process, the clauses that govern the execusion of obligations and any non-performance.
Decommissioning in the oil and gas industry, of installations involve the removal of hefty structures from very hostile environments. This process is a complex and the governing legislation has its own exceptional set of challenges as legal requisites are demanding but obligatory.
Department for Business, Innovation and skill has concerns that if liability is not taken by IOC’s for decommissioning, UK government could be in breach of its international agreement requirements. This is enforceable against UK government in the OSPAR Convention which oversees the UK’s Guidance Transcripts on removal of Oil & Gas structures under the Petroleum Act 1998 and establishes UK’s international obligations on decommissioning.
An example of government liability was seen in 2005, where two parties entangled in the Ardmore block insolvency case left the UK government with the likelihood of absorbing a part of the decommissioning cost. The aim is, hence, to make sure the obligation for decommissioning falls on oil companies and make certain such involved parties have the fiscal capability to meet their obligations. It is also imperative that such oil companies carry out their obligations from ecological, community and technical standpoints.
The OSPAR Convention establishes a system for the decommissioning of abandoned offshore installations, as well as a binding case of Decision 98/3 of OSPAR which bans the discarding and
References: Decommissioning of Offshore Oil and Gas Installation under the Petroleum Act 1998. (2011, March). Retrieved October 2014, from www.og.decc.gov.uk. Decommissioning offshore oil and gas facilities:Industry Contracts and Security Arrangements. (2008). Retrieved October 15th, 2014, from http://www.shlegal.com/. Decommissioning on the UK Continental Shelf-An Overveiw of Regulations. (2011, January). Retrieved October 11th, 2014, from http://www.bureauveritas.co.uk/. Harwood, S. (n.d.). Industry contracts and security arrangements. Retrieved from Decommissioning Offshore of Oil and Gas facilities. Oil and Gad Decommissioning:Present Problems and Future Solutions. (n.d.). Retrieved October 31st, 2014, from International Law Office.