With decommissioning activity on the rise and an anticipated investment by OGUK in excess of £15 billion in the next ten years, it is imperative that operators are alive to necessary environmental compliance and contractual considerations.

Prior to specific service contracts being drawn up, the entire decommissioning process should be mapped out – from preparatory work offshore through to the final disposal of waste onshore.

Operators should understand the regulatory requirements for both offshore and onshore aspects of the work, particularly in relation to waste disposal (as these may vary between assets, depending on specific materials, substances etc), and what is necessary to ensure compliance.

Different regulatory regimes are engaged depending on the type of asset being decommissioned and the waste materials present. For example, where a vessel is to be decommissioned the EU Ship Recycling Regulations and the Ship Recycling (Requirements in Relation to Hazardous Materials on Ships) (Amendment Etc.) Regulations 2018 must be considered whereas the Petroleum Act 1998 applies to rigs.

In general terms, the key legislation to be aware of is:

1. The Convention for the Protection of the Marine Environment of the North-East Atlantic (the ‘OSPAR Convention');
2. The Transfrontier Shipment of Waste Regulations 2007; and
3. The Radioactive Substances Act 1993

    Suitably competent contractors should be invited to tender for the work by operators as early as possible. Assessing each contractor's capability and identifying which aspects of the work they can be deployed on (depending on experience and which permits / licences etc. they hold) will enable efficiencies to be identified.

    In all aspects of decommissioning services, contractual provisions should be reviewed to ensure they align with regulatory obligations. LOGIC's General Conditions of Contract for Offshore Decommissioning is a useful starting point.

    Key points to consider:

    • How many contracts are to be executed? What part of the decommissioning process will each contract cover? The wording in the scope of work should appropriately reflect the work envisaged under the relevant contract.
    • Where will waste be treated, transported, and ultimately disposed of? Given the specific and complex regulatory regimes that apply to decommissioning, a separate contract for the onshore element is advisable. Furthermore, if waste is to be transported and disposed of outside of the UK, additional bespoke contracts will require to be negotiated to take into account the appropriate local legislative provisions.
    • Notwithstanding the above, where onshore work is included under LOGIC's standard decommissioning contract, operators should be aware that the indemnity provisions may be a sticking point with contractors. Indeed, as the Industry Mutual Hold Harmless Deed does not apply to onshore activities, contractors will want to ensure appropriate indemnity coverage as between contractors.
    • Sub-contracting. It is unlikely that one contractor company will have the capability to carry out the entire decommissioning process (even the offshore aspects) and so sub-contracts may well arise. In this case, operators should consider the group definitions as well as the indemnity provisions to ensure they flow through and that the relevant risks are covered.

    The compliance considerations of decommissioning are inherently linked to the contractual issues and should be considered in tandem. Prior to any works commencing, there must be an approved decommissioning plan. The Scottish Environment Protection Agency (SEPA), the Offshore Petroleum Regulator for Environment and Decommissioning (OPRED), the Oil and Gas Authority (OGA) and the Health and Safety Executive (HSE), must all approve the plan. Failure to comply with prerequisites, such as the selection of suitably competent contractors, will result in an objection by the regulators.

    This may delay projects by many months and result in additional unnecessary cost. Therefore, it is in operators' best interests to get their compliance and contractual ducks in a row prior to submitting plans.

    The UK has a strict regulatory framework when it comes to decommissioning, waste management and disposal and so proactively seeking advice at the outset is preferable to reactively seeking advice once a problem has arisen.