1. 1
UNIVERSITY OF DUNDEE
GRADUATE SCHOOL OF NATURAL RESOURCES LAW, POLICY AND
MANAGEMENT
ACADEMIC YEAR: _______ 2015/16 SEMESTER: ______ 2.1
STUDENT ID: 150003996 MODULE CODE: 51039;
TITLE OF PAPER: WHAT IS IN THE PSC TO ALING THE SPILT OF
DECOMMISSIONING COST TO THE OVERALL BENEFIT?
I. ABSTRACT:
As oil production declines in older offshore areas, the cost of decommissioning giant oil and gas platforms
looms over the industry.The price of disposing ofoil and gas installations is enormous yet the costs (both
financial and otherwise) of getting this wrong can be even greater. By 1982, environmental issues were in
the public eye and decommissioning became the most frequent discussed topic for government, taxpayers
and oil companies1.
Chapter one discusses howlegal, tax, accounting and environmental issues overlap with each other with
respect to decommissioning in the international and national sphere. The research thus attempts to
demonstrate decommissioning responsibility allocation between common industry agreements - such as the
licence, the joint operating agreement, the UK security agreement (as well as any M&A and financing
transactions)2 and that of international conventions.
Chapter two analysis the major question: who bears the cost? Under the Licence, it is understood that the
IOC is fully responsible for decommissioning as he have ownership to all the equipment, infrastructure and
reserve. Under the PSC it depends on what the state wants.
Chapter three talks about how government can make IOCs pay decommissioning cost proportional or more
to its share of benefit.
Results from the study shows that states like Trinidad and Tobago and Ecuador have either partially or fully
succeeded in making the contractorresponsible for decommissioning cost to some extent. However, except
from these cases, most states pay for decommissioning cost through cost recoverable to the contractor.
This study entails the use of reports,books, articles, EI source materials, international and national oil and
gas PSCs.
PRESENTED TO: PROF. STEPHEN DOW
1 Smith, Dzienkowski et al, Global decommissioning cost is put at around $40 billion (estimated at 7,300
structures).For Europe removal costs are estimated at about $22billion for the removal of 1600 structures
in the EU and Norway; 2001 p. 824
2 Marc Hammerson Pages: 402 Size: 8.46 MB Publisher: Globe Law And Business; Published: Mar 1,
2013, eISBN-13: 978600004672

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II. TABLE OF CONTENTS
Item Page
ABBREVIATIONS…………………………………………………………… 4
1. INTRODUCTION.................................................................................. 5
CHAPTER ONE = INTERNATIONAL & LEGAL FRAMEWORK ON
DECOMMISSIONING………………………………………………………… 6
CHAPTER TWO = CONTRACTUAL PROVISIONS………………………... 8
a) DECOMMISSIONING FROM THE CONTRACTOR POINT OF VIEW
b) DECOMMISSIONING FROM THE STATE’S POINT OF VIEW
CHAPTER THREE = CAN IOCS BE MADE TO PAY THEIR SHARE OF THE COST
WITHOUT OWNING TITLE? ………………………………………………… 10
2. CONCLUSIONS………………………………………………………… 12
3. REFERENCES AND FOOTNOTES……………………………………. 13

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ABBREVIATIONS
IOC- International/foreign Oil Company; Contractor; Operator
NOC- National Oil Company – State designated Oil Company
HG- Host Government/State
PSC- Production Sharing Contract
PSA-Production Sharing Agreement
JV- Joint Venture
JOA- Joint Operating Agreement
MWP- Minimum Work Program
UNCLOS- United Nations Convention on the Laws of the Sea, 1982
IMO-International Maritime Organization
OSPAR- Oslo and Paris Convention (for the Protection of the Marine Environment of the
North-East Atlantic)
U.S. - United States of America
UK- United Kingdom

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1. INTRODUCTION
Word Count: 517
In the simplest term, decommissioning is the duty to totally or partially remove all
installations, infrastructures and equipment used for the production of petroleum
resources be it onshore or in off shore areas when they are no longer useful for their
intended purpose. It also includes the responsibility to restore site to its natural position
as before development. Early Industry used the term “Abandonment” to refer to
decommission. However, the energy industry now prefers to use decommissioning as
abandonment implies a voluntary relinquishment for the process of removing and
disposing of structures that are no longer useful (Smith et al, 2010).
Onshore decommissioning is relatively uncontroversial and governed by domestic law. It
involves the operator plugging wellbores with cement to prevent ground water
contamination. Storage tanks, wellheads, waste handling pits, processing equipment and
pump jacks removal and any non-producing wells made safe. By contrast, offshore
structures can be large, tall and robust in order to withstand severe weather patterns
leading to usually more difficult and more costly dismantling/removal than the
installation of the original structurei. It involves a detailed planning process to determine
the options; cessation of oil and gas, and safe plugging of the wells; sealing of wellbores
below sea floor; removal of all or parts of the installation; and disposal or recycling of the
removed parts.3
Once an oil field has stopped producing, decommissioning choices are as follows: The
structure can be left in place; partial removed and topple onsite or taken to deep waters
for burial, or completely removed to shore; and re-using old installations at another field
or using of structure to create artificial reefs.4
Under concession/licence systems, the license holder typically owns the equipment and
structures and so would expect to be responsible for decommissioning. The licence
holder also have exclusive right to the petroleum produced and is only responsible to pay
the state royal, taxes and bonuses and would therefore be expected to cover the cost of
decommissioning for the production of which he may have benefitted in majority share.
However, under the Production Sharing Agreement (PSA), the International Oil
Company (IOC) is a contractor with no title to oil except his share received at the point of
sale, provided for by the provisions of cost oil and profit oil. However, many Production
Sharing Contracts (PSCs) transfers all equipment and structures title to the State or its
National Oil Company (NOC) at the early stage of the project. This research intents to
find out if it’s unreasonable for the State to match the equivalent of the contractors
3 Smith, Dzienkowski et al, 2001, p. 824
4 See table for offshore decommissioning options.

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“benefit to its share” of decommissioning cost? And how does the state align
decommissioning cost to the contractor’s share to do so if not?
CHAPTER ONE = INTERNATIONAL AND NATIONAL LEGAL FRAMEWORK
ON DECOMMISSIONING
Word Count: 752
International legal frameworks on decommissioning are widely recognized even though
they are not legally binding. Three major documents addressing international legal
frameworks are:
I. The 1958 Geneva Convention on the Continental Shelf that came in force in 1964.
Article 5(5) provides that: due notice must be given of the construction of any
such installations, and permanent means for giving warning of their presence must
be maintained. Any installations that are abandoned or disuse must be entirely
removed.5
II. The United Nations Convention on the Law of the sea (UNCLOS) 1982.
Article 60(3) provides that: any installations or structures which are abandoned or
disused shall be removed to ensure safety of navigation, taking into account any
generally accepted international standards established in this regard by the
competent international organization. Such removal shall also have due regard to
fishing, the protection of the marine environment and the rights and duties of
other states. Appropriate publicity shall be given to the depth, position and
dimensions of any installations or structures not entirely removed.
III. IMO Guidelines and Standards for the Removal of Offshore installations and
Structures on the Continental Shelf and in the Exclusive Economic Zone, 1989.6
Under the guidelines, structures located on primary navigation routes; structures
in less than 75 meters of water depth and under 4,000 tons; and structures sited
after January 1, 1998 in less than 100 meters and under 4000 tons must be
removed completely.
Other international legal framework includes: Industry Modelsii, the 1972 London
Dumping Convention and Regional Conventions including OSPAR Decision 98/3.
National laws on offshore decommissioning are extremely important as they contain
mandatory requirements and are detailed on issues like:
 Who is to undertake the decommissioning activities,
 What kind of financial security is required,
5 Smith Dzienkwoski et al, Article 5.1 of the Geneva Convention requires that exploration and production
on the shelf must not unjustifiably interfere with navigation, fishing or the conservation of marine life. The
convention is silent about the disposalof the installation after they are removed and about site restoration.
2001, p.830
6 The IMO Guidelines are at http://www.imo.org.

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 Whether the government may choose to take title to some structures and use them
for its purpose,
 If the seller retains any residual liability when it transfers its interest in a contract,
whether site restoration is required or payment of any compensation for
environmental damage,
 Whether total removal is required and when can partial removal is required.
 Fiscal and accounting mechanisms, such as provisions for amortization,
expensing, cost recovery, tax credits, royalty relief, or creation of special
decommissioning fund for such activities,
For example, on the U.S. outer continental shelf, lessees are required to totally remove
offshore platforms and other facilities within one year after the lease or pipeline right of
way terminates unless approval is received to maintain the structure to conduct other
activities. Lessees and non-operators are jointly and severally responsible for
decommissioning obligations. The cost incurred for decommissioning are considered
business costs and are tax deductible (Smith et al, 2010).
The state government that participate in programs that create artificial reefs from
decommissioned oil platforms typically take title and ownership of the structure through
a Deed of Donation from the company responsible for the decommissioning.
In the UK and Norway, current and previous license holders have perpetual residual
liability through the ‘claw back’ provisions that keeps them on the hook. The UK does
not accept this system of immunity as contingent liability is shifted indirectly to tax
payers. On the other hand, Norway allows the government to take over future
maintenance and liability for decommissioned remains upon payment of a lump sum to it.

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CHAPTER TWO = CONTRACTUAL PROVISIONS
(a) DECOMMISSIONING FROM THE CONTRACTORS POINT OF VIEW
Word Count: 324
In the PSC, the IOC assumes all the risk in the venture by executing its obligations under
the terms of the agreement. Essentially, the IOC puts up all the investment and if the
property is nonproductive, a loss is taken and the company surrenders the block.7
If the contractor is made up of more than one company, there should exist a Joint
Operating Agreement (JOA) at the level of the parties to govern the relationship between
the parties. If a NOC is a participant in the PSC, then it will usually be a party to the
associated JOA also and will have to bear its share of decommissioning costs.
Traditional JOAs commonly treat the costs associated with decommissioning like all
other cost incurred in authorized operations. They are borne by the parties with
proportionate interest in the area subject to the agreement. These provisions assume that
the costs of any authorized project are borne initially entirely by the operator, who then
bills the non-operators. Unlike most other projects, however, decommissioning costis not
incurred while the venture is on-going and there is some expectation of ultimate profit;
rather, they occur at the end of the venture when no additional income is expected. Not
only may non-operators have less incentive to pay their shares of decommissioning cost
than of drilling costs, but also the traditional remedies for assuring payment (lien, loss of
interest & equipment, sale of defaulting non-operator share) will be less effective than
they were earlier.
Modern JOAs now include specific provisions for determining decommissioning costs in
advance and establishing an existing fund to deal with them. It may require proportionate
periodic contribution that becomes due in advance of the projected abandonment date.
The purpose of such requirement is to ensure that there will be a source of funds for
meeting abandonment requirements after production ceases.
(b) DECOMMISSIONING FROM THE STATE’S POINT OF VIEW
Word Count: 502
Decommissioning entails planning from the start of the field development to execute
decades later. Once development has been completed, commercial production should
7 Smith, Dzienkowski et al… International Petroleum Transactions:Production Sharing Contract, Rocky
Mountain Mineral Law Foundation 2001, P. 473

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occur. At this point the fiscal provisions pertaining to cost recovery and production
sharing will be the most important provisions of the PSC.
“The key questions that the state should consider are: (1) what cost can be recovered? (2)
How does the recovery of capital costs differ from the recovery of operating costs? (3)
How such cost will be reimbursed? (Smith et al, 2010)8
In answering the questions:
1. All costs of development are recoverable. Exploration costs are often but not
universally recoverable. Generally, any signature bonuses or other bonuses or
rentals are not cost recoverable. If the NOC has taken a participating share at the
development stage, the NOC may or may not have paid its share of development
costs as incurred. If the NOC was carried through Production, then the IOC is
allowed to recover the cost of carrying the NOCs’ paying interest.
2. Operating costs are generally recovered as incurred in the form of cost oil and
take priority over the recovery of capital costs. Accounting provisions determine
whether and how indirect cost of overhead, financing costs, risk capital and
inflation is recoverable by provisions for ‘uplift’. Capital costs are usually
recovered over period of years, much like depreciation is recovered when
calculating income tax.
3. Modern PSCs limit the amount of oil to a percentage of total production; some
PSCs provide for royalty- resulting in a concession-PSC hybrid. The HG’s royalty
share comes off the top of every barrel. If there’s no royalty, most modern PSCs
will require that some percentage of periodic production will be “deemed profit
oil.” Both royalty and deemed profit oil effectively limit cost oil to some
percentage of total periodic production. Any royalty oil that comes off the top of
every barrel is entirely allocated to the host government. But profit oil including
deemed profit oil is shared between the HG and the IOC according to the formula
set forth in the PSC.
Under the PSC, unrecovered expenses can be carried forward until the end of productive
life of the field. However, if the cost have not been fully paid at the end of the productive
life of the field, the contractor if obligated under the PSA or the MWP to carry on
decommissioning may have to fund decommissioning costs even though it is still owed
money for the project’s initial costs.9
The fiscal treatment of decommissioning costs varies among host states, but most have
mechanism in place to finance future removal costs, such as amortization over field life,
carrybacks against taxation, or tax credits and expensing to assure that decommissioning
funds are built up and available at the end of the project.
8 All three questions bearupon the extent to which the host country will share in the costs of exploring and
developing the block. Rocky Mountain Mineral Law Foundation 2010 p. 474
9 Smith, Dzienkowski et al, 2010, p. 841

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CHAPTER THREE = CAN IOCS BE MADE TO PAY THEIR SHARE OF THE
COST WITHOUT OWNING TITLE?
Word Count: 1,731
Whether decommissioning is motivated by lack of government capacity or political
expediency, except where the expenditure is allowed as a full credit or offset against
IOC’s tax obligation, the requirement to decommission is analogous to explicit tax on the
investor, the scale of which depends on whether or not the expended cost is deductible. If
government does not allow decommissioning cost to be tax deductible or does not
approve it as a capital cost when operations ceases, the IOC will be required to perform
the obligation and there will be no income against which to recover the cost.
Government could also employ ring fencing so as to prevent the contractor from
leveraging cost from another field he hold interest in within the same jurisdiction. If a
project is “ring fenced,” the contractor cannot take income from one PSC awarded
acreage and use it as reimbursement for another PSC acreage therefore, when
decommissioning is triggered and there is no income revenue to recover
decommissioning cost from, contractor cannot recover his decommission expenses from
another project.
The following models demonstrates some effort in making IOCs pay a share of
decommissioning cost:
In the UK, the Energy Industry has developed a standard decommissioning security
arrangement to improve the negotiations between the joint venture partners and
government. The benefits of the arrangement are to reduce the cost of providing
securities, remove duplication and ensure that provisions are appropriate and tied to cost
guidelines. This arrangement which has been named the Decommissioning Cost
Provision Deed (DCPD), was launched at an oil and gas UK seminar on 26 September
2007 in Aberdeen.10 The DCPD ensures appropriate provisions are in place to cover each
company's share of future decommissioning costs. It is widely regarded as an important
step towards the management of joint obligations on decommissioning liabilities
consistent with the goal of maximizing recovery of UKCS oil and gas reserves.iii
The Trinidad and Tobago article 37 provides that: Contractor shall pay twenty five (25)
cents in the currency of the United States of America per Barrel of oil equivalent
produced into said escrow account. All amounts paid into such escrow account by the
Contractor shall be cost recoverable subject to the Accounting Procedure and the
auditing provisions of the Contract.iv
10 OGEL; Department of Business and Regulatory Reform (BERR), UKCS, September, 2007

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In furtherance, article 37.4 provides that the Minister may at his sole discretion access
funds from the escrow account in the event that Contractor (i) fails to effect
environmental clean-up during the term of this Contract, or (ii) fails to properly abandon
wells, or decommission facilities to the satisfaction of the Minister upon termination of
this Contract. Where the Minister accesses the escrow account as aforementioned
Contractor shall be required to pay into the account the sum used for said purposes within
sixty (60) days. If the approved budget is more than the value of the escrow account,
Contractor shall pay the difference based on a per unit of production assessment. The
assessment shall be calculated dividing the difference between the approved budget and
the value in the escrow account by the estimated units of Production to be produced and
saved by Contractor between the date of the Minister's approval and the anticipated date
of the abandonment.
37.9 (a) Upon determination of the Contract, where Contractor fulfils all obligations in
respect of environmental remediation, abandonment of wells and decommissioning of
facilities to the satisfaction of the Minister, all existing funds in the escrow account shall
remain with the Minister.
(b) If the escrow amount is insufficient to complete the approved programme, Contractor
shall pay all such additional required costs.
The Ecuadorian Model, article 3.1 provides that Texaco Petroleum Company (Texpet)
shall undertake the Environmental Remedial Work at its own cost, and under its sole
exclusive responsibility. If Texpet so wishes, it may perform the Environmental
Remedial Work through a qualified Contractor, selected by Texpet from a list of
companies approved by the Ministry of Energy and Mines on behalf of the Government,
and Petroecuador, by Memorandum 005-SMA-95 of February 7, 1995, signed by the Sub
secretary of the Environment, which approval shall not exempt Texpet from its direct
responsibility for the complete and punctual completion of the Environmental Remedial
Work which it hereby pledges to perform. v

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2. CONCLUSION
Word Count: 244
Modern states executing traditional PSCs did not find amusement in being left with huge
technical capacity gap and decommissioning cost after production cessation. Modern
PSCs have therefore through the provision of obligating the contractor to estimate
decommissioning cost and pay into an escrow account/fund provided for the availability
of cash flow when decommissioning time comes. But there still exist a problem with this
updated solution. The state is paying for decommissioning partially or fully in some cases
due to the fiscal arrangement negotiated under the contract that allows decommissioning
cost to become tax deductible or cost recoverable.
Now is it wrong for the state to pay partially for decommissioning. Based on the precepts
that the state gets more than the contractor; all equipment and infrastructure remains the
property of the state, and the state has full/significant control through the life span of the
of the project, it is not wrong. However in the most modest term, allowing the contractor
to walk away with his (perhaps 30%) share of profit without bearing the equivalence of
his share of decommissioning cost is totally wrong and a detriment to the state’s
realization of its economic benefits from its natural resource.
There is no international legal framework that addresses this issue directly however, as
national framework are more enforceable, it is the responsibility of the state to ensure that
the contractor not only pay his share of decommissioning cost but improve the state’s
benefits in every way possible.

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3. REFERENCES
PRIMARY SOURCES:
Treaties:
IMO guidelines 1982
United Nationals Geneva Convention of 1958
United Nations Convention on the Law of the Sea (UNCLOS) 1972
SECONDARY SOURCES
Books
Smith, Dzienkowski, Anderson et al… International Petroleum Transaction, Rocky
Mountain Mineral Law Foundation, USA, 2001
Bunter M.; The Promotion and Licensing of Petroleum Prospective Acreage, Kluwer
Law International, USA 2002
Articles/Reports:
Farnejad H, How Competitive is the Iranian Buy-Back Contracts in Comparison to
contractual Production Sharing Fiscal System? EI sourcebook, Feb 2016
Hammerson Marc, Globe Law and Business; Mar 1, 2013, p. 402
L. Moller; the Cost of Decommissioning: Government and Industry Attempts at
Addressing Decommissioning Liabilities
Model Contracts:
Trinidad and Tobago Deepwater Model PSC 2013 (OGEL)
Texaco and Petroecuador Model Contract for Implementing Of Environmental Remedial
Work AND Release Form Obligations, Liability AND Claims (REPUBLIC OF
ECUADOR MINISTRY OF ENERGY AND MINING, 1995)

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Websites:
http://www.eisourcebook.org/cms/February%202016/Iran,%20Competitiveness%20of%2
0Buy%20Back%20Contract.pdf
www.ogel.org.
OTHERS
Endnotes
i Smith, Dzienkowski et al; from 1950s to the early 1980s, no thought was given to
removal at the time platforms were designed and installed. Therefore platforms built
during this period were usually concrete gravity sub-structures on the seabed that are
much heavier and more difficult to cut through and remove the steel jackets. 2001, p. 827
ii Both the 1995 and 2002 AIPN Model International Operating Agreement address
abandonment for an optional provision… under which the parties must agree on a
security agreement when negotiating the field development plan. Furthermore, a
withdrawing party remains liable for plugging and abandonment cost related to wells in
which it participated, and such withdrawing party may be requested to provide the
remaining parties with security to satisfy them that such abandonment cost will be met to
the extent legally required. In the event of transfer of interest or rights, the 1995 model
form provides for the transferring party to remain liable before the other parties for the
transferring party to remain accrued prior to the transfer. In 2002 model form, however,
liability of the transferring party for costs of plugging and abandoning wells or portions
of wells and decommissioning facilities in which the transferring party participated is
subject to negotiation…ii
iii The objectives includes: the determination of the decommissioning plan; the
establishment of a trust; the licensee's share of the cost of decommissioning; default; the
payment of decommissioning costs; the assignment and withdrawal; expert resolution;
confidentiality; notices; third parties and finally miscellaneous provisions (including the
applicable law which is English law).
The document also contains templates for a Trust Deed in respect of the payment of the
decommissioning costs (for use between licensee, operator and trustee); Deed of
Adherence (to be executed as a deed by each new second tier participant); and a form of a
letter of credit for estimating decommissioning costs (for banks and agents).
iv 37.1 Within sixty (60) days after cessation of Production or the sooner relinquishment

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of some or all of the Contract Area, Contractor shall carry out to the Minister's
satisfaction an abandonment programme agreed with the Minister for all installations and
pipelines provided by Contractor under this Contract that the Minister elects not to have
delivered up to him in accordance with Article 24.1. With respect to the area being
relinquished and/or facilities thereon, such abandonment programme shall comply with
sound and current international Petroleum industry practices.
37.2 Contractor shall establish an interest bearing escrow account in the name of the
Minister at a financial institution approved by the Minister to accumulate cash reserves
for use to fund against possible pollution and eventual abandonment of wells and
decommissioning of facilities related to Petroleum Operations in the Contract Area.
37.3 Contractor shall pay twenty-five (25) cents in the currency of the United States of
America per Barrel of oil equivalent produced into said escrow account. All amounts paid
into such escrow account by the Contractor shall be cost recoverable subject to the
Accounting Procedure and the auditing provisions of the Contract.
37.5 Not later than five (5) years before the earlier scheduled expiry of the term of the
Contract; or Contractor's anticipated termination of Production of a Field or of operation
of a pipeline, Contractor shall submit for the Minister's approval a proposed abandonment
programme and budget covering all such installations and pipelines provided by
Contractor under this Contract.
37.6 The Minister shall act without unreasonable delay in reaching a decision on
Contractor's proposal under Article 37.5 and may approve or modify or impose
conditions thereon. Before modifying or imposing conditions on the proposal, the
Minister shall notify Contractor of the proposed modification or conditions and give
Contractor the opportunity to make written representations within sixty (60) days
thereafter about the proposed modifications or conditions. After taking into consideration
such representations, the Minister and Contractor shall make their best efforts to mutually
agree on the proposed modifications or conditions of the abandonment programme and
budget. In the event that the Minister and Contractor cannot mutually agree on the
proposed abandonment programme and budget, either Party may, by written notice to the
other Party, propose that the dispute be referred for determination in accordance with the
provisions of Article 33. Until such time that the determination has been made,
Contractor shall make payments into the escrow account referred to in Article 37.2, based
on its proposed abandonment programme and budget. After the determination is made,
Contractor shall adjust the payments to such escrow account to reflect the abandonment
programme and budget so determined.
37.7 In the event that Contractor does not present a timely proposal to the Minister under
Article 37.5 the Minister, after giving thirty (30) days notice to Contractor of his intention
to do so, may prepare an abandonment programme and budget for the Contract Area if
Contractor does not present a proposal by the end of the thirty (30) day period. When the
Minister has so prepared the abandonment programme and budget, it shall have the same
effect as if it had been submitted by Contractor and approved by the Minister.

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37.8 The approved budget for carrying out the approved abandonment programme shall
be provided for by monies paid into the escrow account established under Article 37.2. In
addition to the payments made under Articles 37.3 and 37.4 Contractor shall also pay into
the account a per unit of Production assessment. If the approved budget is more than the
value of the escrow account, Contractor shall pay the difference based on a per unit of
Production assessment. The assessment shall be calculated dividing the difference
between the approved budget and the value in the escrow account by the estimated units
of Production to be produced and saved by Contractor between the date of the Minister's
approval and the anticipated date of the abandonment.
37.9 (a) Upon determination of the Contract, where Contractor fulfils all obligations in
respect of environmental remediation, abandonment of wells and decommissioning of
facilities t o the satisfaction of the Minister, all existing funds in the escrow account shall
remain with the Minister.
(b) If the escrow amount is insufficient to complete the approved programme, Contractor
shall pay all such additional required costs.
(c) In the event the Minister elects to have the facility delivered up to him, the escrow
account shall be transferred to the Minister, who shall assume all responsibility for the
facility and its abandonment and hold Contractor harmless against any liability with
respect thereto accruing after the date of such transfer to the Minister.
v The Environmental Remedial Work must be implemented according to the Scope of
Work, Ecuadoran environmental laws and regulations valid as of the date of execution of
this Contract, especially Environmental Regulations for Hydrocarbon Activities
(Ministerial Decision No. 621 of 1992), and, as a supplement thereto, the international
practices and standards currently acceptable for the oil industry, especially those set forth
in the "Operational Guide of the Oil Industry in Tropical Forests" issued by the E&P
Forum in April of 1991, and the "Guide for the Handling of Exploration and Production
Waste" (E&P) of September of 1993. Petroecuador shall provide Texpet, its Contractor,
or the latter's subcontractors, whenever necessary and subject to availability, adequate
transportation, housing, facilities, logistic support and security for their personnel,
equipment and materials used in the performance of the Environmental Remedial Work
that Texpet pledges to carry out.