Decommissioning—types of decommissioning contracts

Copyright © 2025 LexisNexis
Published by a LexisNexis Energy expert
Practice notes

Decommissioning—types of decommissioning contracts

Copyright © 2025 LexisNexis

Published by a LexisNexis Energy expert

Practice notes
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Oil and gas Decommissioning is usually undertaken by the designated operator of the Licence (for an on behalf of its coventurers), therefore it is important to make sure that all Agreements are in place for all relationships.

Relevant Licensee contracts

Agreement typePartiesPurposeWhen to be in place
Joint Operating Agreement (JOA)LicenseesUsed to agree the process for decommissioning and the accounting of expenditureWhen the licence is entered into
Decommissioning Security Agreement (DSA)LicenseesTo provide for future decommissioning costsIdeally should be agreed prior to field development but, in practice, this usually happens later
Trust DeedEach licensee, the Operator and the Law Debenture Trust CompanyRegulates the funds that have been put in place for the cost of decommissioningDetermined by the DSA

For more information on JOAs and DSAs, see Practice Notes:

  1. •

    The purpose and the principles of the joint operating agreement

  2. •

    Joint operating agreements—operator and non-operating party perspectives

  3. •

    Decommissioning—decommissioning security agreement

Operator and government arrangements—decommissioning relief deed

The Decommissioning Relief Deed/(DRD)

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Jurisdiction(s):
United Kingdom
Key definition:
Decommissioning definition
What does Decommissioning mean?

The final phase in the life cycle of an energy installation covering all activities from shutdown and removal of equipment and material to environmental restoration of the site.

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