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Decommissioning Agreement

Posted byadminon16 09 2021. 0 Comments

The attitude of the British Government is to impose joint and several liability on oil and gas companies in the event of decommissioning and to ensure that these companies have the necessary financial means to fulfil their obligations, which is undoubtedly a major challenge for small oil and gas companies, as they find it difficult to attract funds and therefore compete with larger operators. The decommissioning process consists of several phases. In the oil and gas industry, and more particularly in the offshore industry, drilling security operations are first launched, then the structures and pipes that connect the platform to the processing centers. These operations must be carried out with the utmost care and require both specialized personnel and sophisticated techniques in order to avoid effects on the environment. The removal phase is followed by the identification of suitable sites for the storage of non-usable materials and the final transformation of potentially polluting products such as metal and plastic wrecks, combustible oils, etc. Statistics indicate that 72 deeds of decommissioning have already been signed by mid-2015, freeing up more than GBP 3.5 billion in capital[4]. The above debate has reached an international dimension, as dismantling mainly concerns offshore installations located on the continental shelf. Such a lack of clarity undermines the predictability that should rather be guaranteed in order to attract investment and thus take full advantage of the current trend in the decommissioning industry. Given that costs and liability are important in the decommissioning sector, the first measure is to attract new investors willing to buy mature assets for which they must commit.

According to oil & Gas UK`s closure report[3], published in 2013, the costs of fulfilling closure commitments across the UK`s continental eleven between 2013 and 2040 will amount to around GBP 31.5 billion, of which GBP 10.4 billion is the total planned expenditure between 2013 and 2022. Indeed, over the next 30 years, about 475 production facilities, 10,000 km of pipelines and gas, 15 oil terminals and 5,000 drilling facilities are expected to be closed. . . .

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