Contractual Framework of Decommissioning of Petroleum Installations and Facilities

Document Type : Research Article

Authors

1 Professor, Farabi Campus, University of Tehran, Qom, Iran

2 M.A. of Oil and Gas Law, Farabi Campus, University of Tehran, Qom, Iran

Abstract

When exploration and production operations of an oil or gas field comes to an end, decommissioning of facilities and installations becomes necessary. The challenging issue of decommissioning is caused by the fact that the field is no longer profitable though there is an obligation to provide sufficient funds for decommissioning. Thus, the funding for the decommissioning costs is a matter of differences between the host country and international oil company. Unlike many developed countries, in most oil exporting countries such as Iran, there is no specific legislation for dealing with the different aspects of decommissioning process and the party which is responsible for decommissioning costs. For this reason, the issue of decommissioning is much a matter of contract rather than the law. This article first examines contractual arrangements governing decommissioning process in different parts of the world and reviews the rights and obligations of each party. Then, the Iranian oil contracts will be examined. 

Keywords

References

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Private Law
Volume 14, Issue 1
Spring & Summer
June 2017
Pages 1-25

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