Decommissioning of upstream oil and gas facilities

7.4

Nigeria
In Nigeria, there is a mix of joint ventures (with the national oil company as a
necessary party) and production sharing contracts. Decommissioning laws are in
place in Nigeria. An abandonment programme is required to be submitted to the
Department of Petroleum Resources (DPR) for approval before its implementation.
The Department of Petroleum Resources (DPR) will decide whether it wishes to
acquire the installations. If the DPR does not exercise its option to take over the
disused installations, then the licensee must proceed with decommissioning
activities and restoration of the site. Complete removal is the rule in Nigeria.
A decommissioning fund can also be set up, though not mandatorily required by
law. Contributions to the fund are recoverable.

7.5

Norway
The rule in Norway is also the complete removal of installations from offshore oil
and gas fields, with partial removal only accepted in exceptional cases. Responsibility
for decommissioning activities lies with the existing licensees jointly and severally.
However, a change in the norm is expected to include the possibility of seeking such
responsibilities from previous licensees, but limited to their respective participating
interest at the time of transfer or assignment.
Licence holders are subject to residual liability for facilities or parts of facilities
left in place. Financial securities are not usually required by the Norwegian
authorities for decommissioning obligations. However, in the event of the transfer of
a participating interest, the Ministry of Petroleum and Energy may require a
guarantee from the transferee if its financial capabilities are not believed to be
adequate to meet decommissioning obligations.
Future decommissioning costs must be accrued, but are not subject to tax
deductibility until effectively incurred. Norway provides different treatment for
abandonment (in this case removal of facilities) compared with the plugging and
abandonment of wells.
A new fiscal law of June 2003, commonly called the grant method, provided for
the state to cover part of the decommissioning costs in accordance with the average
tax rate paid by the licensee over the life of the field. It also allows full tax deduction
of decommissioning costs in the year activities are undertaken. In the case of a
licensee exiting the country, cash payments will be made by the state for tax-loss
carry forward caused by decommissioning costs.

7.6

Oman
In Oman, the operator is responsible for undertaking decommissioning activities,
using funds contributed by the joint venturers. Contributions to an abandonment
fund are required, and these are cost recoverable. Expenditure associated with
decommissioning activities is also cost recoverable. Contributions to
decommissioning funds and decommissioning expenditures are tax deductible.
In the case of continuity of production after the term of the licence and
handover of the facilities and operations to the government, the abandonment fund
will be transferred along with the decommissioning responsibility and liability.

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