2023 Reports

Provisions on Liability for Decommissioning Upstream Offshore Oil and Gas Infrastructure in Investor–State Contracts

Dietrich Brauch, Martin; Fresno Rodríguez, Esteban F.; Gallardo Torres, José Luis

Decommissioning upstream offshore oil and gas operations involves dismantling infrastructure and equipment and mitigating their environmental impacts when the oil or gas resource becomes depleted or economically unviable. Stricter climate policy and the energy transition away from fossil fuels are likely to accelerate decommissioning processes. 

This paper provides an overview of the statutory, regulatory, and contractual regimes governing offshore oil and gas decommissioning in ten countries, and qualitatively identifies key financial and environmental risks that might arise in a “rapid phase-out” scenario presented by the energy transition. In doing so, it highlights areas in which these regimes may create risks in a rapid phase-out scenario involving the widespread cessation of offshore oil and gas activities.