Comparative analysis of financial assurance instruments for offshore oil decommissioning and mine restoration

Abstract

This paper introduces how different bonding mechanisms for oil and gas decommissioning and mine restoration can ensure operators’ accomplishment of restoration/decommissioning liability and affect their budget. Four mechanisms presented and compared herein include surety bonds, cash collateral bonds, decommissioning and abandonment provisions, and lease-specific abandonment accounts. The author also provides some cautions and recommends amendments for each mechanism to be efficiently applied to oil and gas decommissioning in Vietnam so as to assure operators’ decommissioning duties without discouraging their potential investments.