The approach to the allocation of dismantling commitments between sellers and buyers in recent transactions on the UK Continental Shelf (UKCS) and possible future changes to the rules on the availability of tax breaks for dismantling expenditure will free up a new research and development activity within the UKCS. We are looking at how this can be done and we may be supporting the main objective of maximising the economic recovery by the UKCS (MER). Oil and gas companies are expected to return the seabed to its original state (subject to certain exceptions), permanently eliminating facilities and/or infrastructure from the seabed and securing wells. Since decommissioning occurs when the asset no longer generates revenue, the inersterisdenne of the dismantling make funds available in advance so that these funds are available during the dismantling, that the entity that provides these funds is still in place on that date. These trusts are created by a dismantling security agreement (DSA), a contract between two (or more) parties, which requires one party to build confidence in another party (or party) for the future costs of dismantling. The trust holds either cash or security and is usually managed by an independent agent. Structuring an operation to maintain decommissioning responsibility is not just a matter of tax relief. When the buyer takes possession of the assets and fulfills the dismantling obligations, but the seller pays for all or a substantial portion of the costs, governance also becomes a central concern when the buzzing amounts are essential. What participation does the seller need in the decisions of the buyer and, if so, of his co-investors with respect to the decommissioning? If part of the economic justification for the transaction is the potential for the buyer to decommission for less than the seller, improper monitoring or interference from the seller may affect that result.
On the other hand, few organizations are pleased that another spends tens or hundreds of millions of dollars without adequate participation. Sellers will also be concerned that the way assets are exploited can effectively increase decommissioning commitments and reputational exposure in the event of a problem during decommissioning operations.