Decommissioning activities have been limited in southeast Asia, with only a handful of countries being able to point to any decommissioning work in the last 20 years and the challenge has become tougher due to three key issues.
Lacking regulatory framework
There is a general inconsistency regarding the approach to international conventions relevant of the decommissioning of offshore installations. International treaties do not have a force of law in every signitory country and the approach taken is inconsistent across the region. Domestically, the decommissioning requirements for southeast Asian nations may vary, depending on various factors. For example, in Indonesia, the implementation of Oil and Gas Law No 22 of 2001 meant that every production sharing agreement (PSC) must contain provisions with respect to post-operation obligations. Another example is Thailand, where the PSC contractor is expected to provide a security deposit, the value of which is approved by the Director General.
Difficulty identifying legal entity with liability
In each case, identifying the entity with liability for decommissioning is not a necessity. New legislation with respect to decommissioning may have an impact on the older concession agreements, PSCs or risk service agreements, subject to the terms of each relevant agreement, and whether the legislation has retrospective effect. In practice, they often lack clarity. There are a many such development agreements or arrangements between States or NOCs and oil and gas companies. However, there is no standard form of agreement; these are usually bespoke agreements, subject to different rules and covering different activities. Unless they are clear on decommissioning liabilities at the end of the JDA term, they would likely give rise to additional difficulties.
Lacking significant decommissioning experience
Since southeast Asia's oil & gas industry is immature when compared to other areas, there arise certain challenges that may not be the case in other areas. A lack of experience is often related to a lack of understanding of the decommissioning cost. Despite an operator or contractor contributing to a decommissioning fund, it is unlikely that the fund would be adequate.
