Upstream decommissioning: where's next and who pays? Report

Insight 03 July 2018

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Report summary

Over 400 oil and gas fields have stopped producing in the last five years and we expect US$32 billion to be spent on decommissioning in the next five. Therefore, thoughts have now turned to who is going to pay for it and the knock-on effect it will have on production, capital investment and M+A. Decisions will be heavily influenced by how the taxation system handles such costs. After assessing over 100 fiscal systems around the world, we have identified two primary approaches to the fiscal treatment of decommissioning. One insists funds are established prior to costs being incurred, while the other waits until they have been spent. The two approaches can be split out into four sub-types, each of which can have a different impact on the finances of both governments and investors. Our report takes some complex concepts and makes them easier to understand. It also covers some of the key questions being asked today.

Executive summary
It's no longer afuture worry, it's an issue today
- Who is going to pay for it all?
Fiscal treatment of decommex
Current fiscal decommex discussions
- North Sea
- North America
- Asia Pacific
- Africa
Fiscal decommex policies are needed now