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Apache v Esso raises concerns over the interpretation of the Petroleum Act 1998

Published on: 25 May 2021
Published by: LexisNexis
  • Apache v Esso raises concerns over the interpretation of the Petroleum Act 1998
  • What was the background?
  • What did the court decide?
  • What are the practical implications of this case?
  • Case details

Article summary

Energy analysis: This case concerned disputes as to the amount of security to be provided under bilateral decommissioning security agreements (BDSAs) executed as part of the purchase in 2011 by Apache from Esso of Mobil North Sea LLC (MNSL). The court’s decision raises potential issues regarding the interpretation of the Petroleum Act 1998 (PA 1998) with regards to decommissioning liability. The court was required to determine whether Esso might be called upon under the PA 1998 to decommission certain wells, drilled after the sale of MNSL, and therefore whether security should be given in relation to those wells. The court found that in order to be covered by a PA 1998, s 29 notice, the wells needed to fall within the definition of an offshore installation which ‘is or has been maintained or is intended to be established’. Since there had been no intention to drill these wells at the time of the section 29 notice, the notice did not cover them and therefore security did not need to cover them. Written by Judith Aldersey-Williams, partner (Aberdeen) at CMS. or take a trial to read the full analysis.

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