Abstract
Purpose – The Research discusses the complexity of decommissioning policy or Abandonment Site Restoration in the Indonesian upstream oil and gas business. Recent regulations provide a limited scope of residual liability for oil and gas contractors and require an expensive cost. It led to potential unfair risk for contractors developing upstream oil and gas work areas. In addition, clear decommissioning targets are needed to succeed the environmental restoration. Legal certainty is required in order to accommodate balanced risk sharing among the state and contractors.
Design/methodology/approach – This research applies normative methods as well as conceptual and statutory approaches.
Findings – This study finds discovers that contractors had limited residual liability through deviating from the polluter pays principles to share the risk with the state. The contractor performs finalconcluding environmental restoration, including decontamination, bioremediation, de-installation, decommissioning and well-plugging per national and international legal frameworks. The government must provide sustainable residual liability funds to support post-operation activities and hold conduct a PROPER Policy to maintain environmental compliance. In addition, it is necessary to mitigate contractual risk by grandfather grandfather clause in Production Sharing Contract.
Research limitations/implications – This research is limited to the scope of upstream oil and gas business in Indonesia after the enactment of the Minister of Energy and Mineral Resources Regulation Number 15 of 2018.
Originality/value – The novelty includes a concept of residual liability in decommissioning, bio-remediation usage as a restoration method, and efficient risk-sharing in Production Sharing Contract.
Keywords: Abandonment Site Restoration, Decommissioning Policy, Residual Liability, Risk Sharing, oil and gas industry; environmental restoration.
Paper type: Technical Paper
Design/methodology/approach – This research applies normative methods as well as conceptual and statutory approaches.
Findings – This study finds discovers that contractors had limited residual liability through deviating from the polluter pays principles to share the risk with the state. The contractor performs finalconcluding environmental restoration, including decontamination, bioremediation, de-installation, decommissioning and well-plugging per national and international legal frameworks. The government must provide sustainable residual liability funds to support post-operation activities and hold conduct a PROPER Policy to maintain environmental compliance. In addition, it is necessary to mitigate contractual risk by grandfather grandfather clause in Production Sharing Contract.
Research limitations/implications – This research is limited to the scope of upstream oil and gas business in Indonesia after the enactment of the Minister of Energy and Mineral Resources Regulation Number 15 of 2018.
Originality/value – The novelty includes a concept of residual liability in decommissioning, bio-remediation usage as a restoration method, and efficient risk-sharing in Production Sharing Contract.
Keywords: Abandonment Site Restoration, Decommissioning Policy, Residual Liability, Risk Sharing, oil and gas industry; environmental restoration.
Paper type: Technical Paper
Original language | English |
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Title of host publication | International Conference on Law, Governance and Globalisation (4th ICLGG, 2023) |
Publication status | Published - 2023 |