2023 Reports

Decommissioning Liability at the End of Offshore Oil and Gas: A Review of International Obligations, National Laws, and Contractual Approaches in Ten Jurisdictions

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

Offshore oil and gas infrastructure faces an existential threat: the increasing exigency of climate change. The Intergovernmental Panel on Climate Change projects that GHG emissions from existing and planned fossil fuel infrastructure will push global warming past the Paris Agreement’s 1.5°C threshold, and more detailed projections estimate that “nearly 60 percent of oil and fossil methane gas . . . must remain unextracted to keep within a 1.5 °C carbon budget.” The growing urgency of climate action, coupled with the increasing adoption of renewable energy systems and energy-efficient technologies, may strand thousands of offshore oil and gas installations across the globe.

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.