SPE 66555
Evolution of International Law on the Decommissioning of Oil and Gas Installations
Mark Osa Igiehon, Shell Nigeria and Patricia Park, Law Research Centre - Southampton Institute
Copyright 2001, Society of Petroleum Engineers Inc.
This paper was prepared for presentation at the SPE/EPA/DOE Exploration and Production
Environmental Conference held in San Antonio, Texas, 26–28 February 2001.
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Abstract
In the laws of many States such as Norway, Australia, Nigeria,
the US and the UK, there is to be found legislation governing
the abandonment or decommissioning disused offshore oil and
gas installations. Additionally and especially as many of the
offshore installations fall outside a State’s territorial waters
and into waters otherwise covered by international law, there
are many international agreements and regulations equally
providing for the standards and manner in such abandoned
structures may be disposed off or otherwise handled.
National and International regulations on the
decommissioning of abandoned or disused offshore oil and
gas installations have in the years past gone through a
metamorphosis. In considering the stages through which
international regulations (and to a lesser extent national
regulations) have progressed, it is very easy to recognise two
very distinct phases, the pre-Brent Spar era and the post-Brent
Spar. The phases are discernible in that after the Brent Spar
incident, international organisations such as the International
Maritime Organisation, Oslo and such like Regional
Organisations had to revisit their guidelines, rules and
regulations on the subject.
This paper therefore proposes to consider in detail,
the comparative law on abandonment in selected jurisdictions,
the international legal and regulatory regime on abandonment
both pre-Brent Spar and post Brent Spar. In doing so, the
paper would reveal that to a large extent, the identified
inadequacies of the regime pre-Brent spar made the
turnaround in regulation pretty inevitable. The paper would
contend that the inadequacy of the international regime pre-
Brent Spar made the incident rather inevitable. The paper
concludes with a discussion as to how the abandonment issue
may be fairly expected to develop into the future.
Introduction
As far as offshore installations are concerned, those structures
placed within a country’s internal waters and the territorial sea
are not subject to international law. As regards those marine
areas falling under the jurisdiction of international law, coastal
states possess the right to erect or permit the erection of
artificial islands, installations and other such structures in the
area, in order to fully exploit their right to the resources of the
same. Article 60 of the United Nations Law of the Sea
Convention 1982 (‘UNCLOS’) provides that coastal countries
have the right to coinstruct and to authorise the construction,
operation and use of artificial islands, installations and
strutures for the purpose of exercising their right to expore for
and exploit the resources of the continental shelf.
A coastal state can install artificial structures and
islands in the continental shelf by itself or through the agency
of others. In every case, the prior approval of the coastal State
is required, before any such installation is undertaken by
anyone. Over each of such installation or artificial island, the
coastal state has exclusive jurisdiction and thus shall make
laws and regulations to govern immigration, customs, health,
and safety, fiscal and such other matters. The exercise by a
coastal State of its rights to place artificial structures and
islands in the continental shelf is exclusive and only limited by
other provisions of international law principally UNCLOS
itself. For example, the coastal State may not approve the
placement of artificial islands or structures on established
international sea-lanes. The coastal state is also vested with
the obligation of creating safety zones (not exceeding 500
metres perimeter), which zones are necessary for the safety of
navigation as well as for the safety of the installation itself.
Safety zones reduce the chances of a ship or other ocean-
vessel colliding with the structure. After having approved an
artificial structure, the coastal state has further obligations to
ensure that due notice of the construction of the structure and
of the safety zones around them, are given for the benefit of
international navigation. The coastal state must also ensure
that there is enough lighting on the structure to give warning
of its presence.
International Law and The Decommissioning of
Offshore Installations
On the disuse or decommissioning of an artificial islands or
installation or structure, Article 60(3) UNCLOS provides that
the coastal state should undertake removal ‘to ensure safety of
2 MARK IGIEHON, SHELL NIGERIA AND PATRICIA PARK, SOUTHAMPTON INSTITUTE OF HIGHER EDUCATION
navigation’ and to the extent that it takes into account ‘any
generally accepted international standards’ which are relevant.
The provisions of Article 60(3) also require, that the removal
by a coastal state of disused structures in the continental shelf
should be effected in such a way as to ensure the protection of
the marine environment together with due regard for fishing
and the interest of other states.
The provisions of Article 60(3) UNCLOS regarding
the disposal of disused structures were at the time new and an
attempt to supersede the previous international treaty
provision covering the subject. The Continental Shelf
Convention of 1958 was the first international treaty providing
for the exploitation of the resources of the continental shelf by
coastal States, Article 5(5) thereof stipulated that: ‘Due notice
must be given of the construction of any such installations and
permanent means for giving warning of their presence must be
maintained. Any installations which are abandoned or disused
must be entirely removed.’
From the respective provisions of Article 60(3)
UNCLOS and the older Article 5(5) of the 1958 convention, it
will be seen that whereas the previous requirement was for
complete and entire removal of abandoned or disused
installations from the continental shelf, the 1982 provisions
imposes far less onerous removal obligations, with regards to
abandonment. It is in view of the fundamental change of
removal obligations coupled with the fact that not all states
which are signatories to the 1958 convention have ratified
UNCLOS, that there has arisen a grave controversy in
international law, as to whether or not the provisions of Article
60(3) could be said to now represent customary international
law. For if Article 60(3) does indeed represent customary
international law on the issue, then the provisions of Article
5(5) would have been superseded for all purposes and for all
states whether or not they have ratified UNCLOS. The
controversy has been and continues to be long drawn out.
Under international law. it is not enough that a country signs
an international convention, that state must go further to ratify
the convention according to its laws before it is taken as bound
by it. In the United Staes and as in Nigeria for example, the
Senate usually undertakes ratification of treaties.
Decommissioning Options
Once an offshore oilfield reaches the end of its productive life,
many options exist for the decommissioning or abandonment
of disused installations. The installations may be wholly
dismantled and the scraps and parts completely removed and
brought onshore for disposal or the platform could be partially
dismantled and significant segments left in place.
Alternatively the installations could be converted to other
useful purposes, of particular interest has been the option of
conversion to artificial reefs to stimulate marine life forms.
Other alternative use proposals discussed even if with
varying degrees of seriousness include conversion to floating
hotels or casinos. The possibility of converting a disused
structure to create an offshore top security prison has even
been mooted.1 Re-use for exploration and production of
SPE 66555
hydrocarbons as will be discussed later is post-Brent Spar, a
growing trend. Another option is to topple or sink the platform
to the sea-bed on decommissioning2 and the oil industry and
many coastal states would rather that such partial removal
(even if of varying degrees) become the norm, primarily on
account of cost savings. Complete removal is of course also an
option and one that environmental protection proponents
would prefer to be the norm.
Complete removal would pose no great technical
difficulty as regards steel platforms, for the installation
process would simply be reversed and the topsides and steel
jackets would thus be removed piece by piece down to a
specified depth below sea level by pile and jacket cutting.
Partial disposal of steel platforms could also be achieved by
for example, removing the topsides and leaving the steel
jacket in place or toppling the whole structure, down to the
deep seabed. Leaving a steel structure completely in place to
deteriorate naturally may not be generally acceptable or even
advisable since the steel members will weaken over time and
before collapsing to the seabed, may pose a danger to other
sea-going users.
As for concrete platforms, since the rate of
deterioration of the material is much slower than of steel, the
case for leaving wholly in place is somewhat stronger.
However complete removal would pose no great difficulty
either. To remove concrete structure would involve the
removal of the topsides, disconnection of seabed connections,
deballasting and injection of water to overcome suction of the
structure to the seabed before refloating the structure and
towing away. Towing away could either be for the purpose of
re-use elsewhere or scrapping on shore or scuttling to the deep
seabed.
3
The Abandonment Controversy
As earlier seen, there is great divergence of opinion as to the
best way of disposing of disused offshore oil and gas
structures, with the scope of controversy being reduced to the
question as to what extent complete removal should be the
norm. The controversy has assumed international dimensions
insofar as most of these offshore installations are to be found
in the continental shelf.
Considerations for the safety of navigation and the
proper use of marine resources prompted international rules on
abandonment of offshore structures. The first major provision
dealing with abandonment as earlier seen, was to be found in
Article 5(5) of the Geneva Continental Shelf Convention of
1958 which provided inter alia, that ‘installations which are
abandoned or disused must be entirely removed.’ At first
sight, the provision is simple and straightforward and would
admit of only one meaning namely that all oil and gas
installations, which have been decommissioned, should be
completely removed from the offshore site. The meaning of
these otherwise clear words of law requiring complete
removal was however, to become clouded. It was argued that
Article 5(5) does not represent customary international law,
that is to say that there has not been ‘a clear and unequivocal
SPE 66555 EVOLUTION OF INTERNATIONAL LAW ON THE DECOMMISSIONING OF OIL AND GAS INSTALLATIONS
practice, reflecting a sense of legal obligation, by the majority
of ratifying states’4 in which case it did not have such
character as would make it binding on non-parties to the
treaty. As regards parties to the said Convention, it was
contended that Article 5(5) had fallen into desuetude.
Furthermore, it was argued that at the time the Convention
was signed, the situation envisaged by the parties had merely
to do with the safety of navigation and fishing, and the only
offshore sites contemplated were those in low-tide waters
where removal is easy, and that there has since occurred a
fundamental change of circumstances, with the result that
parties to the Convention have necessarily been discharged
from their obligations under the treaty.5 It is worth noting that
the argument and controversy surrounding the status of the
provisions of Article 5(5) remain relevant, in so far as a few
significant maritime states have yet to ratify UNCLOS and
therefore remain parties to the 1958 Convention with the
implication, that they are still ordinarily bound by the
provisions of Article 5(5).
A more persuasive argument (from those wishing to
see the end of the complete removal regime) however, is that
although the provisions of Article 5(5) once represented
international law on the subject and did require complete
removal, international law rules on abandonment is now to be
found along the lines of Article 60(3) UNCLOS. As earlier
seen, Article 60(3) allows less-than-complete removal.
Therefore its provisions were warmly welcomed by some
commentators on the subject, especially those who wished for
a way out of the strictures of Article 5(5) and it was argued
that the provisions of Article 60(3) have superseded those of
Article 5(5) and thus there is now no international law rule
requiring complete removal of disused offshore structures.
Comparative Abandonment Law and Practice
Norway. Norway together with the United Kingdom
constitute the two jurisdictions with the most significant
offshore oil and gas operations in the North Sea. In 1994, there
was some 56 Norwegian offshore oil and gas installations in
the North Sea, out of which 12 were made of concrete with
considerable dimensions and the rest, were steel structures.6
The major statutory provision regulating the abandonment or
disposal of offshore structures in Norway is the Petroleum Act
1985.7 In the first place in applying for a licence to develop
and operate an offshore installation the prospective licensee is
expected to anticipate and thus describe how the installation
will be removed at the end of its usefulness as well as to
forecast the estimated cost of total and partial removal at the
expected date of removal.8
Section 30 of the said Petroleum Act 1985 provides
that the Norwegian State will exercise one of four options
regarding the disposal of a disused installation viz.: (i) the
state can take over the offshore facilities, free of charge or (ii)
the authorities (i.e. the Ministry for Oil and Energy) may
arrange with the owner of the facilities, for the temporary use
of the installation; (iii) the authorities may direct that the
disused installation be wholly or partially removed within the
time stipulated; (iv) alternatively the Ministry may require that
3
the owner or licensee take measures to prevent the facilities
from causing any damage or inconvenience. Section 30 gives
the Norwegian Ministry of Oil and Energy, the discretionary
power in each individual case to decide on the question of
removal and the extent to which the removal will be effected
i.e. whether the installation should be completely removed
from the continental shelf or left partially in place.
The Norwegian authorities thus reserve to themselves
discretion to treat abandonment on a case-to-case basis and to
decide in each individual case whether complete or partial
removal will be required. Furthermore the Norwegian
authorities may properly demand full and complete removal of
the installation, even if this goes beyond the commitments of
Norway according to international law. On the other hand, the
Ministry is also free to limit itself to a partial removal of the
installation. The Ministry's decision as to how comprehensive
the removal should be, is generally not a question that the
licensee may have reviewed, before the courts.9
The owner of a disused installation under Norwegian
law, will be liable for the costs of effecting the removal of the
facilities. However Norwegian laws also provide for the state
to contribute towards such removal costs, in a manner which
would appear to be encouraging to owners of installations.
The Norwegian Removal Act of 198610 is the main law
dealing with the financing aspects of decommissioning. Where
the state demands removal of offshore installations, it
(Norway) will contribute towards the removal costs thereof in
the nature of grants to the owner of the installations who bears
the primary liability of effecting the removal. The specific
amount to be given as grant is arrived at, utilising the
licensees' income tax history as it relates to the tax paid on the
income generated from the operation of the disused
installations. In Norway therefore, "the general idea is that, on
the whole, each licensee shall be left in the same position as if
yearly provisions for future removal costs had been recognised
as deductible expenses".
The United States. The offshore oil industry in itself is
thought to have taken off in the United States, particularly in
1947 in the Gulf of Mexico.11 Since then, the offshore industry
has greatly expanded, such that in 1992 for instance, it was
estimated that world-wide there were about 6,500 offshore oil
and gas structures, 4,000 of which were located in the Gulf of
Mexico (offshore The United States).
Under the United State’s federal structure,
jurisdiction and thus responsibility for oil and gas activities in
the deep US continental Shelf resides in the Federal
Government.12 Regulations made thereto by the US
Department of Interior are very simple and straight forward,
even if stringent. The Regulations stipulate that on the
decommissioning of an offshore oil well, all platform
structures including casing, well head equipment and pilings
must be removed by a lessee to a minimum depth of 15 feet
below the seabed.13 Other provisions require the lessee to
provide proof of the requisite site clearance by means of sonar
scans or such other approved means.14 As to time-limits,
4 MARK IGIEHON, SHELL NIGERIA AND PATRICIA PARK, SOUTHAMPTON INSTITUTE OF HIGHER EDUCATION
Section 6 of the US Oil and Gas lease form applicable to
offshore operations provides that:
Removal of property on termination of Lease.
Upon the expiration of this lease, or the earlier
termination thereof as herein provided, the Lessee
shall within a period of 1 year thereafter remove from
the premises all structures, machinery, equipment,
tools and materials other than improvements
needed for producing wells or for drilling or
producing on other leases and other property
permitted by the Lessor to be maintained on the
area.15
The sum of all the regulations set out above, is that in the US
not only must abandoned offshore installations be removed
from the US continental shelf, such installations must be
completely removed and that, within one year of ceasing
operations. Those provisions have not been altered or
changed, even after the adoption of article 60(3) or even after
the IMO Guidelines and Standards, as the United States
continues to insist on the complete removal of disused
offshore oil and gas structures. It has however been pointed
out that in practice, the US federal authorities have softened
their hard stance on the complete removal regime16 by
gradually by giving coastal states some leeway in making their
own abandonment policies, particularly with regards to the
formation of artificial reefs. The end of the cold war has also
brought further relaxation, with the diminishing of US Navy’s
anxiety that Soviet submarines could hide inside abandoned
rig jackets, where they could not be detected by Sonar. The
Minerals Management Service (MMS) who is the Interior
Department's oversight agency for offshore platform
operations now advises on partial removal and reuse as well as
on total removal. Some disused structures have also been
utilised and converted in various rigs-to-reef programmes. On
some of the occasions when structures were completely
dismantled, the debris have either been removed onshore to
scrap-yards or at other times to deep water dumping sites. In
the few cases where disposal of concrete platform in-situ was
permitted, this was achieved by the detonation of explosives at
certain depths thus toppling the structures.
There are no special arrangements for the treatment
of the costs of disposing disused offshore installations, for the
US government considers that such abandonment or removal
costs should be treated as another normal cost of doing of
business and thus the oil industry should fund it just like it
does other (costs) parts of the oil venture. For the oil industry,
this does not create a great burden for the removal costs are
tax deductible like other allowable expenditure in the year the
expenses are actually incurred.
The United State has ratified UNCLOS and thus,
could validly and properly if it wanted, take advantage of the
less onerous provisions of Article 60(3) thereof and the IMO
Guidelines made thereunder if it so wishes. However that has
not resulted in the relaxation of US laws and regulations,
which continue to require, complete removal in all cases.
However and in a manner that most would consider
commendable and acceptable to both oil industry proponents
SPE 66555
and environmentalists (as well as presumably to the fishing
and shipping industry), there now exist a complete framework
for the conversion of some selected rigs to artificial reefs,
under the auspices of the National Fishing Enhancement Act
1984. However even in the disposal of other disused
structures, the authorities sometimes allow disposal of the
debris in deep waters sites rather than requiring complete
scrapping onshore. Clearly therefore and even with its
complete removal regime, the US authorities would appear
pragmatic in their approach to the few individual cases which
they consider deserving of slightly less onerous and different
treatment without losing sight of her complete removal
objective. Thus where there is departure from the complete
removal regime, it is so done on sound and justifiable
principles and there exists a complete framework for ensuring
that all such departures are consistent.
In sum, the US maintains a complete removal regime
but has a structure in place for the reuse of some of such
structures. However and even when complete removal occurs,
the debris are sometimes allowed to be disposed in situ or
elsewhere in some deep water depository. Does that detract
from the complete removal regime? One would submit not,
since the structure itself is broken up, leaving only the debris
or residue of which there would be far less volume over and
above where the original structure is left substantially intact
and in place.
Australia. Australia is a federal state that is made up of six
states (New South Wales, Tasmania, Western Australia,
Victoria, South Australia and Queensland), and the Capital
and Northern Territories. Title to all minerals and petroleum
occurring in their natural state in Australia vests in the
government, which grants leases and licenses to private
companies to undertake exploration and production of such
minerals.17 There is a statutory or regulatory regime which
governs the administration of such leases and licenses, and
which regime also provides for the abandonment and
reclamation of energy sites generally.
As a federal state, jurisdiction over offshore waters is
shared between the states (and territories) on the one hand and
the federal government (commonwealth) on the other hand.
While the States and territories have jurisdiction over waters
adjacent or littoral their coasts, the federal government or
commonwealth has control over submerged lands beyond
coastal waters.18 As a result, each state and the commonwealth
has its own statutory regime for the exploration and
exploitation of mineral and petroleum resources (including
abandonment) even though, the various statutes and
regulations are substantially identical in content .19
The principal statute in Australia dealing with the
abandonment of offshore oil and gas installations is the
commonwealth Petroleum (Submerged Lands) Act 1967 as
amended to 1990 ("PSLA").20 Section 104 of the PSLA deals
with the surrender of permits and provides that the registered
holder of a permit, lease, license or pipeline licence may at
any time, by application to the relevant authority, apply for
SPE 66555 EVOLUTION OF INTERNATIONAL LAW ON THE DECOMMISSIONING OF OIL AND GAS INSTALLATIONS
consent to surrender the said permit, lease or license. One of
the conditions that must however be complied with before the
relevant authority can give his consent to the surrender is that,
the permit or lease-holder must have, to ‘the satisfaction of the
Designated Authority, removed or caused to be removed from
the area to which the surrender relates all property brought
into that area by any person engaged or concerned in the
operations authorised by the instrument, or has made
arrangements that are satisfactory to the Designated Authority
with respect to that property.’21 Section 104 PSLA further
provides that before a surrender can be accepted, the licensee
must have previously made acceptable arrangements for the
conservation and protection of natural resources of the area
and made good any damage to the sea-bed or subsoil.
Thus, it would appear that in Australia there is a strict
and complete removal regime. This strict removal regime is
however ameliorated by the provisions of Section 104(3)
PSLA that provides “Where the registered holder of an
instrument, being a permit, lease, license or pipeline licence,
has not complied with the conditions to which the instrument
is subject and with the provisions of this part of the
regulations, the Designated Authority may give his consent to
a surrender of the instrument under sub-section (1) if he is
satisfied that, although the registered holder has not so
complied, special circumstances exist that justify the giving of
consent to the surrender.’
These latter provisions would appear with respect, to
represent a reservation of powers to the regulatory authority to
allow less than complete removal in a few exceptional cases
where "special circumstances" justify such a departure from
the complete removal regime. There is however no indication
of the type of situations which would amount to such "special
circumstances" as to justify a departure from the complete
removal regime.
Similarly the totality of the provisions of S.107 PSLA
dealing with other ways of terminating the lease, create a
complete and comprehensive removal regime for all disused
offshore oil and gas installations. However the complete
removal regime of S.107 would appear not to be as strict as
that of S.104, by the introduction of the word "may" in S.107
(1) which is not in S.104. Therefore the Designated Authority
retains a certain amount of discretion, for the word "may"
within Anglo-Saxon jurisprudence generally connotes a
reservation of discretion in contrast, to the word "shall" which
imply a mandatory or obligatory direction. As earlier
indicated, there is provision for the imposition of a fine or
penalty where a permittee or licensee delays to comply with
an instruction of the Designated Authority concerning the
disposal of disused offshore structures within the time
stipulated by the said authority for the execution of the
disposal works.22 As regards the funding of abandonment
works, the permittee or licensee under Australian law bears
the costs of such works. Until recently, it was doubtful
whether such costs were deductible as against taxes. By the
provisions of the Taxation Laws Amendment Act (No. 2) of
1992 (Cth), most of the costs for effecting removal of disused
installations are now tax-deductible against income.23
5
In Australia, the oil industry as well as the mining
industry have been very pro-active in preparing for the
eventual abandonment of energy sites and structures even
from the inception of exploration and exploitation activities.
Thus the issue of abandonment of disused structures is often
times dwelt with extensively and in detail, in the joint venture
agreements usually concluded inter se between private
venturers or developers of each such project. The venturers
would usually agree to set up a fund with which to meet the
costs of eventual abandonment or disposal of disused
structures. To that end ‘Parties to the joint venture are usually
required to contribute to the fund according to an agreed
schedule, in proportion reflecting their relative interests in the
project. The manager or operator of the joint venture assumes
responsibility to satisfy all legal obligations relating to
abandonment and reclamation, from the fund.’24
Australia would appear to have had no significant
practical experience to date of the abandonment of offshore
structures. So one is unable to comment on actual practice. In
view of the very comprehensive provisions of statute which
would appear to emphasise a complete removal regime, it is
safe and appropriate to forecast that Australian practice
relating to abandonment would be such that complete removal
would be required in most cases, while consent will only be
granted for less-than-complete removal where the structures
can be used for other purposes or in such other like "special
circumstances." The incorporation of the words "special
circumstances" in Australian legislation on abandonment
would appear to suggest that only exceptional departure from
the complete removal regime would be allowed. One would
therefore postulate that Australian Law while not in the same
emphatic terms as the US’, will eventually result in
abandonment practice that could well mirror that of the US. In
this regard, the Australian oil industry has been pro-active by
making arrangement for the eventual disposal of disused
offshore oil and gas structures.
Nigeria. Title to all petroleum in situ in Nigeria whether
onshore or offshore (i.e., under the Nigerian Continental
Shelf) is vested absolutely in the State.25 Anyone wishing to
explore and exploit petroleum deposits in Nigeria must obtain
the relevant licence or permit from the appropriate
government authority.26
The Petroleum Act vests the Minister for Petroleum
Resources ("the Minister") with powers to make regulations
inter alia for "the prevention of pollution of water courses and
the atmosphere (and for) regulating the construction,
maintenance and operation of installations."27 Pursuant to
Section 9 of the Petroleum Act therefore, the Minister has
made numerous sets of regulations. Of utmost relevance here
are the Petroleum (Drilling and Production) Regulations,28
which set of regulations was originally created in 1969.
A licensee or leasee must obtain the prior consent of the
Director of Petroleum Resources ("DPR") before a well can be
drilled as well as before a well can be abandoned. In the event
of abandonment, the leasee must submit an abandonment
programme to the DPR for his approval before going ahead to
6 MARK IGIEHON, SHELL NIGERIA AND PATRICIA PARK, SOUTHAMPTON INSTITUTE OF HIGHER EDUCATION
plug or abandon any well. Regarding the disposal of other
structures and facilities on the termination of a lease or licence
the Regulations require that:
(1) The licensee or leasee shall within two months (or
such further period as the Minster may approve) after
the termination29 of his license or lease -
(a) deliver up to the Minister, in good order, repair
and condition and fit for further working, all
productive boreholes or wells (unless the Director of
Petroleum Resources requires the licensee or leasee
in writing to plug them as he may direct or as
provided by these Regulations) together with all
casings and other appurtenances to the boreholes and
wells which are below the christmas tree and
cannot be moved without causing injury to the said
boreholes or wells;
(b) fill up fence all holes (other than boreholes and
wells) and excavations that he has made in the
relevant area to such an extent as the Director of
Petroleum Resources may reasonably require; and
(c) to the like extent take reasonable steps to restore
as far as possible to their original condition the
surface of the relevant area and all buildings and
structures thereon which have been damaged in the
course of his operations.
(3) On the termination of his license or lease the
licensee shall, subject to the rights of the owners of
the surface or other persons having a legal interest in
the relevant area or any part of it, remove all
buildings, installations, works, chattels and effects
erected or brought by the licensee or lessee upon the
relevant area for or in connection with his operations:
Provided that, subject as aforesaid, the Minister may
specify any such buildings, installations, works,
chattels or effects, and shall then be entitled to take
the same at a price bearing a reasonable relationship
to the written down value thereof.
Where the Minister is not interested in the well itself
(presumably where the petroleum deposit is substantially
depleted), the licensee or lessee must submit an abandonment
programme to the Director of Petroleum Resources and once
such programme is approved, the licensee or lessee must then
take steps to plug or otherwise deal with the well and its
appurtenances below the christmas tree in a manner consistent
with the approved abandonment programme. Secondly and as
regards installations, drilling and production sites, the
Regulations confer the licensee or lessee with the obligation to
take "reasonable" steps to restore the petroleum drilling and
production site to a state as close as possible to its original
condition. The licensee or lessee is also bound to remove "all
buildings, installations, works, chattels and effects erected or
brought by the licensee or lessee upon the relevant area for or
in connection with his operations,30 subject to the interests of
other parties and the Minister's expression of his desire to
acquire the installation in situ.
From the Regulations therefore, there is a complete
removal obligation in Nigeria, except where the oil and gas
SPE 66555
facilities are to be taken over by the Minister, which option
would presumably be exercised where the facilities can be
used for some other useful purpose. The difficulty with the
Regulations however is that they treat onshore and offshore
facilities alike, without taking into consideration and making
specific provisions for the special nature of offshore facilities.
Apart from the Petroleum Regulations, a number of
other regulations are relevant in considering the manner of
disposal of offshore oil and gas installations in Nigeria.
Firstly, there is the Harmful Waste (Special Criminal
Provisions, etc.) Act,31 which prohibits the deposit or dumping
of harmful waste into any waters subject to Nigerian
jurisdiction including the Exclusive Economic Zone. The Act
provides criminal sanctions for any such dumping and would
clearly apply to the disposal of most of the liquids and
materials in an offshore facility. There would also be need to
have regard to any relevant regulations or directions made by
the Federal Environmental Protection Agency under Sections
22 and 23 of the Federal Environmental Protection Agency
Act.32
As regarding the financing of abandonment works,
there are no special provisions of the law in Nigeria. It would
therefore appear that such abandonment costs would be treated
just like all other costs of a petroleum venture and be tax
deductible as appropriate.
Apart from the statutory provisions of the Nigerian
Law discussed earlier, it would appear that until 1995 (i.e.
until the Brent Spar incident), the Supervisory authorities in
Nigeria did not specifically address the practical issues of
abandonment of disused oil and gas facilities. Soon after the
Brent Spar incident however, the Director of Petroleum
Resources (DPR) invited oil companies operating in Nigeria to
produce their proposals for the disposal of all disused
installations land, onshore (swamp) and offshore.
Following the DPR’s invitation, Shell Nigeria was
first to present its proposed abandonment plan/procedure to
the DPR and indications are that, that plan may well form the
pith of DPR’s approved procedure for the whole industry.
Reasonable or conservative estimates are that the first round of
major offshore decommissioning in Nigeria may not take
place until some 50 years hence. The estimates are predicated
on the fact that many land or onshore wells in Nigeria have
been producing for upwards of 25 years and few have been
decommissioned to date as a result of depletion of reservoirs.
Indeed, experts are generally of the opinion that such wells
still have many years of production ahead of them, especially
as new technology emerges for the extraction of depleted
reservoirs. Considering therefore that the production of oil and
gas offshore Nigeria started relatively recently, it is safe to
assume that the first decommissioning of offshore facilities in
Nigeria will not take place for a very long time. Under the said
abandonment plan referred to above, the issue of eventual
abandonment of an oil and gas facility forms a vital part of an
asset’s lifecycle, hence the issue is addressed and planned for
from the front-end or design stage of an oil and gas facility.
Thus the facility’s eventual abandonment is outlined and the
SPE 66555 EVOLUTION OF INTERNATIONAL LAW ON THE DECOMMISSIONING OF OIL AND GAS INSTALLATIONS
costs for achieving the same is projected and built into the
operating costs of the facility over its lifetime.
Under the said abandonment plan, a number of
factors will be relevant when deciding the best way to
abandon or decommission a disused facility. Firstly, it will
have to be shown or demonstrated to the joint venture partners
and governmental authorities that the particular facility
proposed to be decommissioned can serve no other useful
purpose as to be deserving of decommissioning. That may yet
prove to be a difficult task to achieve, insofar as options for
alternative uses of depleted onshore wells are already under
consideration. Alternative uses under consideration include
usage for reinjection of associated gas that would otherwise
have been flared; depleted wells could also be used for the
reinjection of water; or reinjection of drilling wastes. In the
latter case, it could be a very safe and reasonable way to
dispose of waste fluids generated during the drilling and
production process. Alternatively, such depleted wells may
well be used to extract oil from reservoirs far away from the
facility itself, as new technology emerge, such as horizontal
drilling, which make it possible to produce oil from a distance
somewhat removed from the actual location of the oil
reservoir.
In removing disused installations whether onshore or
offshore, no significant technical difficulties are envisaged.
However as regards land pipelines and flowlines, there will be
substantial environmental issues to be resolved, in deciding in
what manner to best abandon those facilities. As regards
pipelines, on abandonment the lines could both be flushed
clean and buried in situ or they could be uncovered and
removed completely and disposed off as scrap. Such complete
removal could however involve substantial environmental
degradation as will be necessitated by extensive digging, etc.
However, leaving the disused pipelines in place could raise the
issue of residual liability as regards any damage that may
result many years later, from such lines left in situ. In view of
the experience of American companies over asbestos litigation
as well as the issue of legal responsibility for lands previously
used as waste disposal sites (contaminated land), the issue of
residual liability (should pipelines be left in situ) becomes less
of a far-fetched consideration. Thus in each case, the oil
industry will generally face many hard choices in planning for
and effecting decommissioning of disused oil and gas
installations in Nigeria and elsewhere.
The Nigerian legal regime is very simple and straight
forward and obliges the license or lease holder to remove all
installations and works he brought to the drilling and
production site and generally to take all reasonable steps to
restore the production site to its original condition. The only
exception is where the Minister decides to pay for and to take
over the facilities himself (presumably in a situation where the
facilities can be put to some further use). There is therefore in
Nigeria, a complete removal regime. Nigeria is party to
UNCLOS and Article 60(3) thereof, yet there has not to date
been a change in the removal obligation on offshore facilities
owners. Matters may of course change in the future as
production progressively move into the deeper offshore. At the
7
present time however, there is a complete removal regime in
Nigeria.
The United Kingdom. The United Kingdom ("UK") together
with Norway make up the major oil and gas producers in the
North Sea region. Operations in the North Sea oil and gas
offshore industry are to a large extent characterised by the
very cold climate and the adverse weather conditions. In the
United Kingdom, all property in petroleum in situ onshore is
vested in the Crown by virtue of the Petroleum (Production)
Act 1934. With the discovery of significant oil deposits
offshore the United Kingdom (starting with the discovery of
Groningen in 1959), the provisions of the Petroleum
(Production) Act were extended and made applicable to the
offshore areas33 which by international law came within the
jurisdictional purview of the UK. Since then, the United
Kingdom Continental Shelf ("UKCS") has become a major
oil-producing region.
The abandonment of offshore oil and gas installations
in the UKCS is of recent incidence and the first major
abandonment programme was effected in 1989 when the
remains of the Piper Alpha platform was toppled in situ. That
occurred however, not because the field or well was
decommissioned but as a result of the fire disaster which
engulfed the platform claiming many lives and rendering the
platform useless. However abandonment is now set to become
a major activity in the UKCS since as most of the oil fields are
approaching maturity, decommissioning of platforms from
depleted fields will increase and grow to become the major
activity as well as of paramount concern. As at 1993 there
were over 150 fixed platform on the UKCS, major pipelines
were in the region of 3,000 miles in overall length.34
Abandonment in the UK is in the main, provided for
by the provisions of the Petroleum Act 1987, in addition to
some other relevant statutes and regulations. Section 1 (1) of
the Petroleum Act requires the licensees of offshore
installations to submit proposals for the abandonment of their
structures to the Secretary of State for Energy whenever he(the
Secretary) serves notice on the owners, requesting same. The
notices may also be served not only on the licensees but also
on anyone having a significant interest in the installation,
which would include the actual owner of the structure (if
different from the licensee) as well as other joint-venture
partners. The supervising department had indicated that it will
serve notices requiring costed abandonment programmes first
and foremost on the licensee or joint venture partners (as the
case may be), while reserving the option of serving similar
notices on other interested parties as a fall-back, should the
licensee(s) fail 35 to comply with the initial notices. The
Department of Trade and Industry (DTI) has stated that in
practice it will serve such notices on the licensees within three
months of the commissioning of the installations.36 In other
words, the eventual abandonment of the installation would be
an important consideration for the licensees and operators of
the offshore oil and gas right from the commencement of
operations.
8 MARK IGIEHON, SHELL NIGERIA AND PATRICIA PARK, SOUTHAMPTON INSTITUTE OF HIGHER EDUCATION
The abandonment programmes submitted by the
relevant parties must contain all essential information
regarding the platform. It must also contain the preferred
abandonment or disposal option; the results of consultations
with other interested parties; the estimated costs of such
disposal works; the time table for effecting the abandonment
works; project management and verification methods expected
to be in place; debris clearance methods; post abandonment
monitoring and maintenance as would be necessary; and
general supporting studies.37
There are other UK legislation relevant to
abandonment such as the Petroleum (Production) Act 1934
under which provision is made for the creation of regulations
setting out model clauses to be incorporated into every
offshore licence for the exploration and exploitation of
Petroleum. Under the appropriate clauses, a licensee must also
obtain a written consent before any well can be abandoned.38
The Coast Protection Act 194939 makes provision for the
safety of navigation. The Act stipulates that the consent of the
Secretary of State for Transport must be obtained before the
emplacement of any installation or pipelines or structures on
the UKCS.40 Usually attached to such consents is a condition
to the effect that on the disuse of any such structure or
pipeline, no hindrance or danger to navigation would result
thereby. Similarly, disposal of disused installations would
have to satisfy any specific removal conditions attached to the
emplacement consent. The Food and Environment Protection
Act 1985 which controls the deposit of substances or wastes
within UK controlled waters is also relevant. The supervising
authority under that Act must issue a licence to allow deposit
of any such wastes in UK controlled waters. Since partial
removal will involve such a deposit of waste material into the
sea, then the relevant licence must be obtained in the
circumstances. In granting such a licence, the supervising
authority must have regard to the need to protect the marine
environment as well as the need "to prevent interference with
the legitimate uses of the sea"41
The UK is a party to the Continental Shelf
Convention 1958. The UK is also a signatory to the UNCLOS
1982 but is yet to ratify that Convention. The appropriateness
of the UK taking benefit of Article 60(3) UNCLOS is at best
doubtful though the UK contends that the provisions of the
said Article 60(3) have passed into customary international
law and thus is now binding on her.
As earlier indicated, abandonment is a recent incident
in the UK and the first significant disposal was that of the
disabled Piper Alpha platform in 1989. The Piper Alpha
platform was toppled to the seabed leaving a column of water
at least 75 metres above the debris.42 Initially it was the UK’s
position that in considering whether or not to approve
abandonment programme submitted by licensees, it will pay
particular attention to the IMO Guidelines and Standard.
The international furore surrounding the disposal by
dumping plan approved by the UK, of the disused Brent Spar
however gravely tested UK policy and attitude to the
abandonment of disused installations.
SPE 66555
Kuwait. Kuwait is a major oil producing country and is
located in the important Middle East region. It is also a
member of the Gulf Corporation Council. Members of the
Council are noted by their close co-operation on many
governmental matters and issues.
For many years, most aspects of petroleum
exploration and exploitation in Kuwait (as in most Gulf states)
were governed and catered for by provisions in the various
concessions, contracts and agreements signed by the State's
Ruler on the one hand and foreign oil companies on the other.
In such agreements, environmental protection considerations
tended to be covered by provisions that were very brief in
nature or by fleeting references to environmental
considerations. For example in the Agreement made the
eleventh day of October 1955 between the Emir of Kuwait and
the D'Archy Kuwait Company Limited,43 the only clause
bordering on environmental protection was Article 2(C) which
stipulated that:
The Company's operations shall be conducted with
due regard to the character of the sea overlying the
Concession Area and the Concessionary Waters and
in particular the Company undertakes that in the
exercise of its rights and in the fulfilment of its
obligations under this Agreement it will interfere to
the minimum extent possible with and will take
adequate precautions for the protection of navigation
fishing and pearling and that it will comply with all
reasonable requirements of the competent
authorities affecting the navigation of ships and
aircrafts.
The clause speaks for itself and had the effect of requiring the
oil company operator to disturb the environment of the
operations area as little as possible in order to protect fishing,
navigation and pearling. Since then further steps have been
taken to strengthen the environmental regime and most of the
additional environmental protection measures and legislation
have been initiated at the Gulf regional level. In the main,
environmental measures are provided for regionally with the
contracting States expected to implement domestically the
measures agreed at such regional level.
The Regional Organisation for the Protection of the
Marine Environment ("ROPME") is itself based in Kuwait and
has been at the vanguard of proposing and directing measures
to enhance protection of the marine environment, in the Gulf
region. Towards that end, many regional protocols have been
adopted including "The Protocol for the Protection of the
Marine Environment Against Pollution from Land-Based
Sources of 21 February 1990". Specifically and as regards
offshore installations, the ‘Protocol Concerning Marine
Pollution Resulting from the Exploration and Exploitation of
the Continental Shelf’ ("the Continental Shelf Protocol") was
adopted and signed on 29 March 1989. It is significant that the
latter Protocol is expressly stated to have been prepared
pursuant to the provisions of UNCLOS 1982, Articles 197 and
208. Those provisions encourages coastal states to adopt laws
and regulations to prevent and control pollution of the marine
environment and enjoins such states to take measures either by
SPE 66555 EVOLUTION OF INTERNATIONAL LAW ON THE DECOMMISSIONING OF OIL AND GAS INSTALLATIONS
themselves or jointly with other states in their region of the
world.44
The Continental Shelf Protocol was (as earlier stated)
intended to provide for measures to prevent and control
pollution of the marine environment by petroleum exploration
and exploitation activities. Towards that end therefore, Article
III thereof, binds each contracting state to ensure that any
offshore operation in the area within its jurisdiction is carried
out only under the license of such contracting state. Such
license "may be granted subject to such conditions for the
protection of the marine environment and coastal areas as the
Competent State Authority sees fit to impose."45 Furthermore
and where there are significant risks of pollution from a
proposed offshore operation, the Protocol provides that the
Competent State Authority should previous to the grant of a
license and commencement of operations, request and receive
an assessment of the potential environmental effects of the
proposed offshore operation.46 A summary of the report made
after such an assessment exercise should then be made
available to other contracting states that can respond and make
representations thereto.47 Another relevant provision of the
Continental Shelf Protocol is Article V that provides thus:
1. Each Contracting State shall endeavour to ensure
that offshore operations within its jurisdiction shall
not cause unjustifiable interference with lawful
navigation, fishing or any other activity carried on or
under a bilateral or multilateral agreement or on the
basis of international law, and that in siting an
installation, due regard shall be had to existing
pipelines and cables. Regard shall also be had to the
need for protecting sites of special ecological and
cultural interests.
2. Each Contracting State shall take steps to ensure
that, within the area of its jurisdiction, operators of
offshore installations survey the seabed in the vicinity
of their installations, and remove any debris resulting
from their operations which might interfere with
lawful fishing:
(a) in the case of a pipeline, or other sub-sea
apparatus immediately following completion of the
work of installation;
(b) in the case of production platform, immediately
following its removal;
(c) in any case when the competent State Authority
might reasonably require survey and clean up.
The above provisions which relate to the removal of debris
collateral or resulting from the operation of an offshore
production platform is very useful and effectively caters for
the removal of materials such as drill cuttings and so forth.
There would therefore appear to exist in Kuwait and within
the Protocol area, an obligation to remove all debris resulting
from the operation of an offshore petroleum platform, from off
the sea-bed on the cessation of production activities.
Regarding the manner in which a disused platform may be
handled or disposed of, the Continental Shelf Protocol also
lays down detailed guidelines as to the directives Contracting
States should issue for the disposal of such abandoned
9
structures. Article XIII provides for such abandonment and
deserves to be reproduced in extenso:
1. Each Contracting State shall ensure that the
Competent State Authority has the power to require
the operator of an offshore installation:
(a) in the case of a pipeline -
i) to flush and remove any residual pollutants from
the pipeline, and
ii) to bury the pipeline, or remove part and bury the
remaining parts thereof, so as to eliminate for the
foreseeable future any risk of hindrance to navigation
or fishing, taking all circumstances into account.
(b) in the case of platforms and other sea-bed
apparatus and structures, to remove the installation
in whole or in part to ensure the safety of navigation
and in the interests of fishing.
Each Contracting State shall also take all practicable
measures to ensure that the operator has sufficient
resources to guarantee that any such requirements can
be met.
2. Where Contracting States have a common interest
in fishing grounds in the Protocol Area, they shall
endeavour to adopt a common policy on the removal
of installations.
In determining any case whether or not installations
must be removed, Contracting States shall have
regard to any Guidelines issued by the Organisation.
Whether pipelines are removed or not, they shall be
flushed to remove residual pollutants.
3. Contracting States shall pass, and take all practical
steps to enforce, measures to ensure that no offshore
installation which in use has floated at or near the
sea-surface, and no equipment from an offshore
installation, shall be deposited on the sea-bed of the
continental shelf when it is no longer needed.48
From the foregoing, it could be safely concluded that Kuwait
and the other Gulf states who are parties to the Protocol have
reserved to themselves, the right to direct either complete or
partial removal of disused offshore platforms and pipelines.
There is also a strong emphasis on the need to take into
account the interests of fishing when a contracting State is
considering whether to direct complete or partial removal.
Indeed the tone of Article XIII would appear to place a major
emphasis on or regard for fishing interests.
There would however with respect, appear to be a
contradiction within the Continental Shelf Protocol provisions
regarding the disposal of abandoned offshore structures. While
Article XIII(3) on the one hand provides that no equipment
from an offshore installation will be allowed to be deposited
on the sea-bed of the Continental Shelf when disused, Article
XIII (1)(b) would in some cases allow disused platforms to be
so deposited or at least left in place. Clearly there is
contradiction if the smaller pieces cannot be left in place but
the bigger, massive and whole structure could be so left. The
situation thus presented is somewhat incongruous. Another
point worthy of note from the provisions of Article XIII is that
10 MARK IGIEHON, SHELL NIGERIA AND PATRICIA PARK, SOUTHAMPTON INSTITUTE OF HIGHER EDUCATION
there is active encouragement of close co-operation between
the various Gulf Contracting states, such that a common
policy regarding the disposal of disused offshore structures is
expected.
It is manifest that within Kuwait and other co-
operating Middle East Gulf States, the law as made out gives
the option or discretion to the supervising authorities to order
either complete or partial removal of disused offshore
structures. There is however strong emphasis on the protection
of the interests of fishing and navigation. Furthermore, one
would submit that the tone of the law as set out in Articles
IV(a), V and XIII of the Continental Shelf Protocol would
suggest that there is a greater and stronger emphasis on
complete removal of disused platforms than partial removal of
any kind. In the circumstances therefore, it is appropriate to
posit that Kuwaiti and Gulf laws and rules on abandonment
would appear to create a regime, which while reserving the
option of partial option, would generally prefer complete
removal of disused structures. This is even more the case
when it is remembered as earlier stated, that on a comparative
scale with other regions world-wide, it would cost the least to
remove disused offshore structures in the Middle east Gulf.
When the cost issue is juxtaposed with the busy nature of
international maritime lanes of the Gulf, it is fair to conclude
that Kuwaiti laws and the laws of the other states comprising
the Gulf Co-operation Council will, in most cases require
complete removal of disused offshore structures while partial
removal will be the exception.49
The Development of International Law on
abandonment: balancing of contending interests?
Further to the United Nations Convention on Law of the Sea
1982 (‘UNCLOS’), the IMO Guidelines and Standards were
adopted which though not legally binding effectively give
coastal states considerable discretion to determine in what way
any particular disused facility may be dealt with, on
decommissioning.
Flowing from the discussions surrounding both the
emplacement and decommissioning of offshore installations
generally, particularly the planning which accompanied the
initial deliberations preceding the expansion of the UK
offshore oil industry particularly, it is clear that a number of
interests are vital to any discussion relating to the
emplacement, operation and decommissioning of offshore oil
and gas structures. These interests are the safety of navigation;
fisheries; protection of the marine environment and; the
imperative to search for and produce oil and gas to meet
society’s energy needs.
Those interests are recognized as relevant by the
provisions of Article 60(3) UNCLOS which in its terms urged
that the removal of disused installation should be effected to
"ensure safety of navigation” as well as having "due regard to
fishing, the protection of the marine environment and the
rights and duties of other states". The contending interests
thus recognised as crucial in the disposal of disused structures
were those of fishing; the protection of the marine
SPE 66555
environment; the rights and duties of other states and the
needs of the oil industry. There is an additional obligation to
have due regard or consideration for the safety of navigation
both in the emplacement, operation and disposal of platforms.
This obligation is a sense trite as evidenced for example, by
the international law provisions directing states not to allow
the placement of any oil and gas installation (and indeed any
artificial island or structure) in any recognized sea lanes, for to
do would interfere with international navigation.50
Furthermore every offshore installation has surrounding it, a
safety zone of 500 metres radius, which safety zone is needful
and provided for to ensure the “safety both of navigation and
of the artificial islands, installation and structures."51 Also
details of the construction or emplacement of any offshore
structure or installations must be given to the international
community in the usual manner, for the purpose of giving
warning of their presence.52 For which reason, the installation
must be sufficiently, etc., all to ensure the safety of navigation.
As regards the importance of fishing to any
consideration of the abandonment question, in addition to the
reference in Article 60(3) UNCLOS, the significance of
fishing is a vital consideration is buttressed by the fact that in
the United Kingdom at least, well before the establishment,
spread or proliferation of North Sea oil industry, the fishing
industry was constantly consulted.53 Again fishing is
important, to the extent that the creation of safety zones as
previously discussed means that the safety zones areas are no
longer available for fishing. Similarly the mode of disposal of
disused installations (as for example where there is deep sea
dumping or leaving in place) could have adverse impact on the
fishing industry. From the foregoing therefore and as
recognized by the provisions of Article 60 (3) UNCLOS54,
fishing as a concern is a vital interest to be catered for in any
debate as to how disused offshore oil and as structures may be
disposed off.
As to the protection of the marine environment, aside
the reference to the same in Article 60(3) UNCLOS, the status
or case for environment protection has now assumed a high
profile and recognition world-wide. From the well-known
"polluter pays principle"; to sustainable development; to
internationally agreed measures to reduce global warming; to
the obligation of states to prevent Trans-boundary transfer of
substances harmful to the environment, etc., the imperative for
the protection of the marine environment can now be said to
form an integral part of customary international law and
clearly, there is an obligation to prevent the infliction of harm
to the high seas environment.55 Further evidence for this
obligation proliferates in the work of the international
community, such as The Oslo Convention for the Prevention
of Marine Pollution by Dumping from Ships and Aircraft
(Oslo Commission); The Paris Convention for the Protection
of the Marine Environment of the North East Atlantic 1992;
the London Convention on the Prevention of Marine Pollution
by Dumping of Wastes and other matter 1972; the Kuwaiti
Protocol for the Protection of the Marine Environment against
Pollution from Land-Based Sources of 21 February 1990 and;
the Kuwaiti Protocol concerning Marine Pollution resulting
SPE 66555 EVOLUTION OF INTERNATIONAL LAW ON THE DECOMMISSIONING OF OIL AND GAS INSTALLATIONS
from the Exploration and Exploitation of the Continental Shelf
of 29 March 1989, etc. From the foregoing, it is clear that in
addition to the Article 60(3) UNCLOS provision, it is
appropriate to conclude that there is an international law
obligation to prevent pollution of the marine environment.
Consequently the protection of the marine environment is a
factor which ought to have been paramount in the
consideration or debate of issues relating to the disposal of
offshore oil and gas installations.
In sum therefore (and as recognised by Article 60(3)
UNCLOS and some other sources of international law), the
interests of safety of navigation, fishing, and protection of the
marine environment ought to have been given substantial
consideration in the further development of international law
obligations on abandonment. The issue therefore arises, as to
whether or not these interests were indeed sufficiently
provided for, in the progressive development of international
law obligations on abandonment. Was there a there a
balancing of the various factors in the drawing up of Article
60(3) UNCLOS and the IMO Guidelines? The answer would
be in the negative, for a thorough analysis of the events and
developments leading to the adoption of Article 60(3)
UNCLOS and the IMO Guidelines would reveal that both
were adopted almost exclusively at the behest of the Oil
Industry lobby acting through its E & P Forum. There was
little or no reference to the other relevant interests. It is
therefore clear that rather than achieve a balance to satisfy all
competing interests, the scale was tilted too far in favour of
the bottom line of the oil industry.
Developments Post-Brent Spar
After the initial furore and denunciations that followed the
Brent spar controversy, with Greenpeace at the forefront,
which within the context of customary international law could
be regarded as protests, the question was open as to whether or
not the protesting states would formalize their protests. In
other words, would the protest be sufficiently verbalised or
pursued as to slow intent not merely to play to the gallery but
to take formal steps to protest at the new or alleged act of state
practice. Many of the developments of law and international
relations relating to abandonment have taken place in Europe.
This is of course, in sense to be expected to the extent that the
UK and the other European countries in the North Sea area
were there directly affected or impacted by the Brent spar
controversy.
Soon after the Brent Spar incident of June 1995, there
was a meeting of the parties to the Oslo and Paris Convention.
The parties had previously in 1992 adopted the Paris
Convention for the Protection of the Maritime Environment of
the North-East Atlantic (the OSPAR Convention). At the
meeting of the OSPAR Commission in June 1995, member
states (with the exception of Norway and the UK) agreed a
moratorium on the disposal of disused structures at sea. The
UK and Norway, and predictably too, were not happy with the
decision. At that meeting the parties declared that ‘the
disposal at the sea of decommissioned offshore installations
cannot be considered to be a sustainable practice which takes
11
into account the precautionary approach.’ OSPAR
Commission member states had another meeting in the
summer of 1998, where detailed rules were adopted for the
disposal of offshore platforms.
Before then using the opportunity of the September
1997 OSPAR meeting in Brussels, the UK announced a
fundamental change to her policy on the dumping of chemical
and nuclear waste at sea.56 That sea-charge in policy had the
effect of ruling out the dumping of nuclear waste at sea, the
phasing out of chemical discharges and prescribing that as a
norm, the complete removal of disused offshore oil and gas
structures would be required. The import of that
announcement was that complete removal became the norm in
the UK, with less than complete removal to be allowed only in
exceptional circumstances. This is ironic for UK previously
was the greatest proponent of less-than complete removal.
The "Greening" Of Decommissioning
The new OSPAR regulations are clearly more environmental
friendly as consistent with the precautionary principle and
clearly amounts to a paradigm shift. The precautionary
principle itself is a relatively new concept that is fast gaining
ascendancy in international law. The principle simply put
"requires that policy-makers adopt an approach which ensures
that errors are made or the side of excess environmental
protection.'57 The principle clearly shifts the emphasis to the
protection of the environment in any circumstance where there
would appear to be a conflict between environmental
protection and other issues such as economics (especially
where there is scientific uncertainty) The principle though still
evolving has gradually been assimilated into international law.
It was put in this apt manner, in the 1990 Berger Ministerial
Declaration on sustainable Development in the ECE Region,
In order to achieve sustainable development, policies
must be based on the precautionary principle.
Environmental measures must anticipate, prevent and
attack the causes of environmental degradation.
Where there are threats of serious or irreversible
damage, lack of scientific certainty should not be
used as a reason for postponing measures to prevent
environment degradation. 58
Clearly the new OSPAR regulations (by its requirements for
complete removal, with the onus on those requesting
exceptions to the rule to justify the same) are clearly in
furtherance of the precautionary principle.
In the oil industry, three new trends are discernible as
relating to the decommissioning of disused offshore facilities.
These trends are the greater re-use of decommissioned
platforms; keeping depleted oil fields producing economically
for as long as possible; and increasing roll-out of new
technical concepts and marine vessels to reduce the much-
touted technical challenge of removing the more difficult
platforms, to become a common place challenge.
Greater Re-Use. In Europe at least, there is an increasing
emphasis on the re-use of decommissioned offshore structures.
For example some operators in the Netherlands have removed
12 MARK IGIEHON, SHELL NIGERIA AND PATRICIA PARK, SOUTHAMPTON INSTITUTE OF HIGHER EDUCATION
their disused platforms and used them for new developments
elsewhere. One operator has purchased a decommissioned
platform from another operator.59 The new owner intends to
use the decommissioned platform in its new development.
The re-use of old platforms clearly carries a lot of
advantages for the new owners. The platform allows the
operator to save significantly on capital expenditure, while at
the same time allowing new fields to be produced earlier then
would be the case if new platforms were to be constructed.
For the seller operator, it is also a win-win situation, it is able
to dispose of its obsolete structure in a cost-effective,
environmentally friendly manner, while being left off the hook
on the residual liability question.60
As evidence that the option of re-using obsolete
offshore platforms is a growing trend, a market for disused
platforms is rapidly developing. In that market place,
prospective purchasers are matched with prospective sellers.
One of this companies leading the way in the development of
this market place is WEB Platform Brokers, which provides
brokerage services for complete re-use options. One issue to
contend with in the complete re-use scenario, is that the
movement of the platform from its location to a new location
in a different country would involve compliance with
international law obligations restricting the trans-boundary
transfer of hazardous waste. Compliance will be achieved by
ensuring that all controlled substances are removed from the
platform prior to its journey to the new location.
New Engineering Solutions & Vessels For The Removal Of
Platforms. One of the arguments proferred for many years by
the oil industry to resist the complete removal regime was that
the complete removal of the gigantic North sea structures is
not technically feasible in many instances and in other cases
could be hazardous to the safety of those to effect the removal.
Since Brent Spar and its the fall outs, there has been
many developments on the technical front. Now designs,
systems and approaches to enable the safe removal of disused
platforms are rapidly emerging. For example Dr. Olav Olsen
have studied the possible removal of some of biggest UK and
Norwegian offshore structures and concluded that those
structures can be easily removed from the sea.
With the signal opportunity provided by the Brent
Spar incident, some offshore construction contractors have
been working with speed to position themselves for the newly
emerging business of platform disposals. In addition to
tackling the technical and engineering challenges, new
concept vessels have been launched to undertake the actual
removal.
These concept vessels are intended to simplify the removal of
the bigger structures, (particularly the removal of topsides as
single units) at economically attractive rates. In some cases,
new vessels capable of lifting redundant offshore structures
are already being built.
SPE 66555
Conclusion
Under the principles of international law, if a state has not
ratified the 1982 UNCLOS Convention but signed the 1958
convention then, they are still bound by their obligations to the
Convention to which they are a party in this respect. That was
the position of the UK at the time when a license was granted
for the dumping of the Brent Spar at sea. Therefore the
granting of the license was contrary to the UK’s international
obligations, and it is sugeested that the costs to the treasury of
alternative more costly disposals had an over-riding influence.
The position of Shell was that they are only bound by the
domestic laws of the state under which jurisdiction they
operate. However, under the UK law the operator must put
forward the Best Practicable Environmental Option for
disposal, and it was this aspect which Greenpeace were
challenging.
The protection of the marine environment is expressed in
Articles 192 to 195 UNCLOS, which could be claimed to be
part of customary international law, relying on the number of
previous treaties concerning this area i.e. MARPOL; London
and Oslo Dumping Conventions; Principla 21 of the 1972
Stockholm Declaration. It can also be argued that the
importance of Articles 208, 210 and 211 of UNCLOS seem to
have the effect of incorporating, by implication, the 1972 LDC
and the 1973/78 MARPOL Convention. If this view is correct,
then states which have ratified UNCLOS will thus be
compeled to adopt the basic standards set, inter alia, by those
two treaties, even if they are not party to them. More than any
other aspects of UNCLOS these provisions are indicative of an
altered sense of priorities in the treatment of marine pollution.
It is no longer essentially a matter of high seas freedom
moderated by reasonable use, but one of legal obligation to
protect the environment. It is suggested that this reasoning, as
well as the public protests surrounding the Brent Spar, largely
led to the developments which resulted in the OSPAR
Declaration regarding the removal of abandoned offshore
installations, with the emphasis reverting to a clean seabed
policy wherever possible.
It would appear therefore that the future of decommissioning
would tend more towards a clean seabed and complete
removal regime. The development of new technology and
marine vessels to tackle disused structures will likely lease to
faster, safer, easier decommissioning. Greater re-use of
decommisioned facilities is also expected. The oil industry is
expected to take a greater interest in having regard to the
protection of the environment and will seek more and more to
convince both governments and the society that her activities
are environmentally friendly. Since Brent spar, there is a
growing trend for oil companies to steer clear of private
resolution of issues within governmental circles, and instead
seek more and more to consult with the Non-Governmental
Organisations (NGOs), the informed public, the environmental
protection lobby and other stakeholders. The Brent Spar
incident would appear to have resulted in a new international
and national environmental and social agenda.
SPE 66555 EVOLUTION OF INTERNATIONAL LAW ON THE DECOMMISSIONING OF OIL AND GAS INSTALLATIONS
Acknowledgements
We thank Roy Jordan of the National Library of Australia, Ms
Ferial Al-Freih, Kuwait Institute for Scientiifc Research and
Dr. Ahmad Al-Samdan, Faculty of Law – Kuwait University,
for assistance in locating vital materials.
References
1 See for example, "Oil firm offers rig to plug Norwegian prison leak', Daily Telegraph 23rd April
1988, at page 9. The benefits highlighted (rather far-fetched it seems) of converting a disused platform
to form an ocean jail include: ‘It would solve all sorts of problems, from preventing escapes to helping
solve the overcrowding problem. Security would be much more effective than on land ...’
2 See generally Fulghum, 'Big Oil Over a Barrel: Retiring Rigs to Reefs', (1988) Business and Society
Review 22
3 The following discussion on the abandonment controversy formed part of first author's earlier article,
Igiehon, 'The Abandonment Controversy - From The Development Of International Law To The Brent
Spar Incident - "Economy" Overshadowing Environmental Protection?, (1996) 7 OGLTR pages 298 -
304.
4 R. Higgins, 'Abandonment of energy sites and structures', (1993) Journal of Energy and Natural
Resources Law 6 at page 8.
5 ibid. at pages 8-9
6 Kirten U. Selvig, "The Removal and Alternative Disposal of Oil Installations - The Norwegian
Approach", (1994) 3 OGLTR 81 at p. 82.
7 Act of March 22, 1985. For an excellent discussion of issues arising from the abandonment of
offshore structures in Norway see O. Fjellsa, "The Norwegian Position and Consequences", IBC
Conference on Decommissioning and Removal of Offshore Structures, London: 19/20 April 1989; also
Bull and Kaasen, "Abandonment and Reclamation of Energy Sites and Facilities: Norway", (1992) 1
Journal of Energy and Natural Resources Law (vol. 10) 37; and K. U. Selvig, supra.
8 Guidelines on Arrangement and Contents of Plan for Development and Operation of Petroleum
Deposit: Issued on 6 September 1990 by the Norwegian Petroleum Directorate. Regulation 9.1. thereof
provides that: "Method of how the installation is intended to be removed should be described. The
method description should contain a description of the anticipated condition of the installation at the
time of Removal." Regulation 9.2: "Calculations showing the cost of total or partial removal of
installations should be presented."
9 Bull and Kaasen, supra at pp. 30-39
10 Act No. 11 of April 25, 1986.
11 See generally Judith Gurney, "Abandonment of Offshore Rigs: Experience in the Gulf of Mexico",
Petroleum Review May 1992 at p. 37. The article contains an excellent review of abandonment
experience in the US’ Gulf of Mexico.
12 See the Outer Continental Shelf Lands Act, 43 U.S.C.A. S.1331.
13 30 C.F.R. S. 250. 143(b)
14 30 C.F.R. S. 250.114
15 See E & P Forum, Abandonment Obligation (Removal of Offshore Structures, E & P
Forum, London (April 1989) at p. 47.
16 See Gurney, supra at 237
17 See Michael Crommelin, "Abandonment and Reclamation of Energy Sites and Facilities:
Australia", (1992) 1 JENRL (Vol. 10) at p. 9. See also Section 5, Seas and Submerged Lands
Act 1973 (Commonwealth or “Cth”)
18 Michael Crommelin, supra at p.109.
19 ibid.
20 Reproduced in Mining and Petroleum Law Service, Law Book Co., Sydney (1990). All the
states have passed legislation which contain parallel or identical provisions to the
Commonwealth Act.
21 Section 104 (2)(c), PSLA.
22 Section 107(3) PSLA
23 See Cromellin, supra at pp.113-114.
24 ibid. at p.112.
25 Section 1(1), Petroleum Act, cap.350 Laws of the Federation of Nigeria 1990.
13
26 The Minister for Petroleum Resources is vested with authority to issue the various
licences: See Section 2 Petroleum Act supra.
27 Section 9(1) Petroleum Act.
28 Cap. 350, Laws of the Federation of Nigeria 1990.
29 Termination is defined in Regulation 61 of the Regulations as meaning where the lease or
license has expired by effluxtion of time or any other form of termination or determination
including a situation where a leasee surrenders his lease.
30 Regulation 45(3).
31 Cap. 165, Laws of the Federation of Nigeria 1990.
32Cap. 131, Laws of the Federation of Nigeria 1990. Section 22 provides that: "The Minister
for purposes of this Part of this Act may, by regulations, prescribe any specific removal
methods, natural contingency plans, financial responsibility levels for owners or operators of
vessels, or onshore or offshore facilities, notice and reporting requirements, penalties and
compensation as he may determine necessary to minimise pollution by any hazardous
substance."
33 That was achieved by the Continental Shelf Act 1964.
34 Catherine Redgwell, "Abandonment and Reclamation Obligations in the United
Kingdom", (1992) I JENRL (Vol. 10) 59 at p.79.
35 See Department of Trade and Industry, Consultative Document: Guidance Notes for
Industry - Abandonment of Offshore Installations and Pipelines under the Petroleum Act 1987,
issued by DTI Oil and Gas office, Aberdeen (May 4, 1995) at pp.7-8. The publication is
hereinafter referred to as ‘DTI Consultative Document.’
36It was also indicated that the licensee would be expected to consult other interested parties
e.g., fishing interests and incorporate their responses into the proposed abandonment plan to be
submitted.
37 DTI Consultative Document, supra at p.13.
38 See DTI Consultative Document, supra at p.5. The consent is administered by the
Secretary of State though it is actually granted by the UK Health and Safety Executive on his
behalf.
39 Extended by the Continental Shelf Act 1964
40 Section 34, Coast Petroleum Act 1949.
41 DTI Consultative Document supra, at p.6
42 For a further discussion of that abandonment exercise, see Butler, “Progress in
Implementation of the UK's Abandonment Legislation", (1988/89) 6 OGTR 147 at pp.150-153.
43 See Text reproduced in Selected Documents of the International Petroleum Industry - Iraq
and Kuwait: Pre-1966, published by OPEC Publications, Vienna at p. 153.
44 See Articles 208 and 197 UNCLOS 1982.
45 Article III Continental Shelf Protocol.
46 Article III(a) Continental Shelf Protocol
47 Article IV(3) Continental Shelf Protocol
48 Article XIII, Continental Shelf Protocol
49
50 See Article 60(7) UNCLOS
51 Article 60(4) UNCLOS
52 Article 60(3) UNCLOS
53 See Scottish Fishermen's Federation (SFF), Managing the Environmental Impacts of
Decommissioning and Abandonment Offshore, a paper delivered at B.I.C.S. International
Conference on Decommissioning Aberdeen 18th/19th May, 1994. At page 3, the SFF recounts
14 MARK IGIEHON, SHELL NIGERIA AND PATRICIA PARK, SOUTHAMPTON INSTITUTE OF HIGHER EDUCATION SPE 66555

at length, the involvement of fishing interests in discussions regarding the operation and
disposal of offshore installations, right from the inception of the UK North Sea oil industry.
54 “… Such removal shall also have due regard to fishing, the protection of the marine
environment and the rights and duties of other states.”
55 John Salter, "Offshore Installations Disposal", (1995) 11 OGLTR, 456 at p.457.
56 Paul Brown, "Uk Bans Nuclear Dumping At Sea", THE GUARDIAN 3/9 97
/
57 Mclntyre and Mosedale, "The Precautionary Principle As A Norm Of Customary
International Law", (1997) J
ournal of Environmental law Vol.9 No.2, page 221 at 222.
58 See Philippe Sands, Principles Of International Environmental Law
, Manchester
University Press ( anchester New York) 1995, at page 210. See pages 208 to 213 for a fuller
M ,
discussion of the precautionary principle.
59
Otto Van Voorst, "Offshore Facility Re-use - A Viable Option", Petroleum
Review, September 1999 at pages 38 to 39.