Decommissioning in the Middle EastOctober 2, 2018
Middle East markets are home to around 700 facilities that need to be decommissioned. How can companies take advantage of this opportunity? An exclusive insight provided by Lloyd’s Register and Devine & Severova tackles this question, along with issues of liability and models of legislation.
With a significant number and concentration of older oil and gas facilities, decommissioning is becoming a hot topic in the Middle East.
While jurisdictions vary, many producing countries in the region do not yet have mature legislative and regulatory structures for decommissioning and older oil and gas contracts do not address the issue in detail. This creates the potential for uncertainty regarding the allocation of decommissioning liabilities, the standards applicable to the abandonment of infrastructure and the handling of residual long-term liabilities. Bearing in mind the potential severity of civil and criminal sanctions for breach of environmental laws, it is of paramount importance that companies and their partners understand the extent of their responsibility for decommissioning and abandonment liabilities and obligations.
This article discusses the technical, commercial and legal challenges that industry players are facing in the region (with reference to the authors’ first-hand experience) and which will become more urgent as installations approach their end of life. It discusses the types of contractual, legal and regulatory regimes currently in place in the Middle East and, drawing from more mature jurisdictions such as the UK, the advantages and disadvantages of alternative approaches to regulating decommissioning.
Finally, the article looks to the future by assessing the challenges and opportunities for upstream companies and consultants and explores some of the potential ways to achieve a satisfactory outcome for all stakeholders.
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- From the field