Risk Allocation and Distributive Justice in the Energy Industry : Law, Policy and Practice / Smith I. Azubuike.

Format:

Book

Author/Creator:

Azubuike, Smith I., author.

Language:

English

Subjects (All):

Offshore gas well drilling--Risk management.

Offshore gas well drilling.

Offshore oil well drilling--Risk management.

Offshore oil well drilling.

Physical Description:

1 online resource (xxiv, 262 pages.)

Edition:

First edition.

Place of Publication:

Edinburgh : Edinburgh University Press Ltd, [2024]

Summary:

This book examines the practice of risk allocation in the offshore energy industry through the public policy lens and offers a novel perspective on the concept of gross negligence in risk allocation. This perspective is founded on the proportionality element of distributive justice in burden distribution. The assessment of how mutual indemnity clauses apply as an absolute shield against liability arising from gross negligence reveals that moral hazard can result from the practice. In the analysis, this book considers the risk allocation practice in PSC and Concession regimes and how parties' liability is determined in drilling contracts. This book considers gross negligence a sui generis risk and provides a definitional pathway for determining when gross negligence occurs and how it should apply to offshore drilling contracts. Thus, it advances an environmental sustainability approach to offshore petroleum drilling operations. This book will be useful to operators and contractors, resource-rich countries, insurance companies, practitioners, scholars, and academics interested in risk allocation in the petroleum industry.-- Provided by publisher.

Contents:

Frontmatter

Contents

Acknowledgments

Preface

Foreword

Table of Cases

Table of Instruments

Abbreviations

Chapter 1 Risk Allocation in the Offshore Energy Industry: An Overview

1. 0 General Introduction and Background

1. 1 Understanding the Concepts of Risk and Risk Allocation

1. 2 Risk and Related Concepts

1. 2. 1 Risk and Uncertainty

1. 2. 2 Risk and Probability

1. 3 Risk Ca tegorisation

1. 4 Scholastic Perspectives on Risk

1. 5 Other Approaches to Risk

1. 5. 1 The Judicial Approach

1. 5. 2 The Legislative Approach

1. 5. 3 The Economic Approach

1. 6 Essential Concepts in the Discussion about Risks

1. 6. 1 Risk Management

1. 6. 2 Risk Aversion

1. 6. 3 Risk Allocation

1. 6. 4 Risk Mitigation

1. 6. 5 Contractual Risk Allocation in the Oil Industry

1. 7 Conceptual Understanding and Usage of Terms

1. 7. 1 Negligence and Gross Negligence

1. 7. 2 Human Rights and Environment

1. 7. 3 Sustainability

1. 7. 4 Distributive Justice

1. 7. 5 Freedom of Contract

1. 7. 6 Public Policy

1. 8 Essential Terms in a Contract Matrix

1. 8. 1 Co-Venturers

1. 8. 2 Operator

1. 8. 3 Contractor

1. 8. 4 Subcontractor

1. 9 Purpose and Objective of the Book

1. 10 Me thodology and Structure of the Book

Chapter 2 The Context of Offshore Petroleum Drilling Operations and Risk Allocation

2. 0 Introduction

2. 1 O ffshore Petroleum Exploration

2. 2 Drilling Contracts

2. 2. 1 Daywork/Day Rate Contract

2. 2. 2 Footage Contract

2. 2. 3 Turnkey Contract

2. 3 Allocating Risks in the Oil and Gas Industry

2. 4 Contractual Risk Allocation in Specific Jurisdictions

2. 4. 1 United Kingdom

2. 4. 1. 1 United Kingdom Model Contracts

2. 4. 1. 2 Analysis of the United Kingdom Mutual Indemnification Practice

2. 4. 2 United States of America

2. 4. 2. 1 Model Contract for Risk Allocation in the United States

2. 4. 3 Nigeria

2. 4. 3. 1 Standard Form Contracts for Drilling in Nigeria

2. 4. 3. 2 Risk Allocation in Drilling Contracts in Nigeria

2. 4. 4 Indonesia

2. 4. 4. 1 Regime for Risk Allocation in Indonesia

2. 4. 4. 2 Risk Allocation in Indonesian Production Sharing Contract Forms

2. 4. 4. 3 Risk Allocation in Operator and Contractor Private Drilling Contracts in Indonesia

2. 5 Changing Perceptions of Risk Allocation

2. 6 Risk Allocation Tools in Oil and Gas Contracts

2. 6. 1 Mutual Indemnity Agreements

2. 6. 2 Hold Harmless Clauses

2. 6. 3 Mutual Indemnity and Hold Harmless Provisions in Context

2. 6. 4 Exclusion and Limitation of Liability Clauses

2. 6. 4. 1 Exclusion Clauses

2. 6. 4. 2 Limitation of Liability Clauses

2. 7 Rationales for Risk Allocation in Oil and Gas Contracts

2. 7. 1 Industry Practice Rationale

2. 7. 2 Doctrine of Tradition

2. 7. 3 Best Knowledge Doctrine

2. 7. 4 Clay Feet Doctrine

2. 7. 5 Accountability Doctrine

2. 7. 6 Rationale Founded on Legal/Economic Considerations

2. 7. 7 The Party in the Best Position to Bear the Risk

2. 7. 8 Overall Efficiency Rationale

2. 7. 9 Economic Benefit Rationale

2. 7. 10 Foreseeability Rationale

2. 7. 11 Other Rationales

2. 8 Regulatory Interventions in Risk Allocation

2. 8. 1 Anti-Indemnity Legislation

2. 8. 2 Indemnification in Texas

2. 8. 2. 1 Texas Express Negligence Rule

2. 8. 2. 2 Texas Anti-Indemnity Statute

2. 8. 3 Indemnification in Louisiana

2. 8. 4 Unfair Contracts Terms Act 1977

2. 8. 5 Contracts (Rights of Third Parties) Act 1999

2. 9 Conclusion

Chapter 3 Conceptual Considerations in Risk Allocation in the Offshore Energy Industry

3. 0 Introduction

3. 1 Concept of Freedom of Contract

3. 2 Limit of the Freedom of Contract

3. 2. 1 Commodification

3. 2. 2 Externalities

3. 3 Public Policy and the Freedom of Contract in Risk Allocation

3. 3. 1 What Is Public Policy?

3. 3. 2 Public Policy An Unruly Horse?

3. 3. 3 Public Policy and the Exercise of the Freedom of Contract

3. 3. 4 Public Policy and Risk Allocation behind the Veil of Ignorance

3. 3. 4. 1 Conceptual Understanding of the Veil of Ignorance

3. 3. 4. 2 Hypothetical Risk Allocation behind the Veil of Ignorance in the Hydrocarbon Industry

3. 3. 4. 3 Assessing the Veil of Ignorance in Gross Negligence Cases

3. 4 Sustainability Dimensions in Risk Allocation

3. 4. 1 Concept of Sustainability

3. 4. 2 Aspects of Sustainability

3. 4. 2. 1 Environmental Aspect

3. 4. 2. 2 Social Aspect

3. 4. 2. 3 Economic Aspect

3. 4. 3 Sustainability Risks

3. 4. 4 Why Is Sustainability Essential to the Offshore Petroleum Industry?

3. 4. 4. 1 Reputation Risk Management

3. 4. 4. 2 A Way of Securing the Social Licence to Operate

3. 4. 4. 3 A Strategy to Maximise Environmental and Social Performance

3. 4. 5 Sustainability in Risk Allocation in the Oil and Gas Industry

3. 5 Distributive Justice in Risk Allocation

3. 5. 1 What Is Justice?

3. 5. 2 Distinctions in Justice

3. 5. 2. 1 Conservative versus Reformative Justice

3. 5. 2. 2 Substantive versus Procedural Justice

3. 5. 2. 3 Comparative versus Non-Comparative Justice

3. 5. 2. 4 Corrective versus Distributive Justice

3. 5. 3 Types of Justice

3. 5. 3. 1 Distributive Justice

3. 5. 3. 2 Procedural Justice

3. 5. 3. 3 Retributive Justice

3. 5. 3. 4 Restorative Justice

3. 6 Distributive Justice: Concept, Dimensions and Essence

3. 6. 1 Context

3. 6. 2 Rawlss Distributive Justice Perspective

3. 6. 3 Nozicks Distributive Justice Perspective

3. 6. 4 Keatings Distributive Justice Perspective

3. 6. 5 Theoretical Elements of Keatings Distributive Justice

3. 6. 5. 1 Fairness

3. 6. 5. 2 Proportionality

3. 6. 5. 3 Mutual Benefit

3. 6. 6 Why Is Distributive Justice Essential in Risk Allocation?

3. 7 Distributive Justice and Private Law

3. 7. 1 Contract Law and Tort as Vehicles of Distribution

3. 8 Distributive Justice: A Practical Element in Allocating the Risk of Gross Negligence

3. 9 Conclusion

Chapter 4 Causation and Gross Negligence in Risk Allocation

4. 0 Introduction

4. 1 Causation and Liability

4. 1. 1 Causation: Meaning and Legal Foundation

4. 1. 2 Causation and Liability for Grossly Negligent Conduct

4. 2 Gross Negligence: Context and Dimensions

4. 2. 1 Gross Negligence A sui generis Liability?

4. 2. 2 A Historical Perspective on Gross Negligence

4. 2. 3 Varying the Standard of Care in Negligence

4. 2. 4 Contextualising the Meaning of Gross Negligence

4. 2. 4. 1 Regime of Gross Negligence in the United States

4. 2. 4. 2 Regime of Gross Negligence in the United Kingdom

4. 2. 4. 3 Gross Negligence: Perspective of the United Kingdom Courts

4. 3 Wilful Misconduct

4. 4 Challenges Associated with Managi ng and Allocating Gross Negligence Risk

4. 4. 1 Challenge of Defining Gross Negligence

4. 4. 2 Varied Standards of Proof for Gross Negligence Cases

4. 4. 3 Limited Application of Gross Negligence: Not a Term of Art

4. 4. 4 Limited Statutory Provision for Gross Negligence in Petroleum Regulations

4. 4. 5 Limited Insurance Coverage

4. 5 A Working Definition of Gross Negligence in Offshore Drilling Contracts

4. 6 Gross Negligence: Examining the Test for Corporate Responsibility in Offshore Drilling Operations

4. 7 Conclusion

Chapter 5 Guiding Principles for Effective Risk Allocation in Gross Negligence Cases

5. 0 Introduction

5. 1 Guiding Principles

5. 1. 1 Public Policy Principle

5. 1. 2 Human Rights Principle

5. 1. 3 Sustainability Principle

5. 1. 4 Distributive Justice Principle

5. 2 An Ada ptable Framework for Risk Allocation in Gross Negligence Cases: Strategies for Mainstreaming Liability

5. 2. 1 Regulatory Strategy

5. 2. 2 Contractual Strategy

5. 2. 2. 1 Liability Subject to the Proportion of Benefit

5. 2. 2. 2 Indemnity

5. 2. 3 Implications of Rethinking the Contractual Strategy

5. 3 Conclusion

Chapter 6 Practical and Institutional Frameworks and Insurance Coverage for Implementing Risk Allocation in Gross Negligence Cases

6. 0 Introduction

6. 1 Institutional Framework

6. 1. 1 Coordination

6. 1. 2 Training and Capacity Building

6. 1. 3 Institutional Interoperability

6. 2 Insurance and Other Coverage Options in the Oil and Gas Industry

6. 2. 1

Insurance and Financial Coverage in the Oil and Gas Industry

6. 2. 2 Liability Protection Schemes for the Offshore Oil Industry

6. 2. 2. 1 Offshore Pollution Liability Association Limited Scheme

6. 2. 2. 2 Oil Insurance Limited

6. 2. 2. 3 Oil Casualty Insurance Limited

6. 2. 2. 4 Offshore Energy Insurance Cover

6. 2. 3 Types of Offshore Energy Insurance

6. 2. 3. 1 Coverage for Damage to Offshore Facilities

6. 2. 3. 2 Operators Extra Expense

6. 2. 3. 3 Excess Liability Insurance

6. 2. 3. 4 Loss of Production Income Insurance

6. 2. 3. 5 Protection and Indemnity Insurance Coverage

6. 3 Insurance Coverage and Gross Negligence

6. 4 Aligning Insurance with the Public Policy and Distributive Justice Objectives

6. 5 Applicable Insurance Practice in Gross Negligence Cases

6. 5. 1 An Additional Insured Provision in Insurance Policies

6. 5. 2 Status of an Additional Insured

6. 6 Financial Assurance Mechanisms/Strategies to Cover Pollution Liability

6. 6. 1 Available Financial Assurance Tools

6. 6. 1. 1 Pooling

6. 6. 1. 2 Insurance

6. 6. 1. 3 Self-Insurance

6. 6. 1. 4 Capital Market

6. 6. 2 Are Financial Assurance Mechanisms Fulfilling Their Purpose?

6. 6. 3 Financial Assurance Tools and Gross Negligence Situations

6. 7 Regulatory Reforms for Effective Allocation of Gross Negligence Risk

6. 8 Conclusion

Chapter 7 A Summary for Stakeholders

7. 0 Introduction

7. 1 A Dynamic Approach to Risk Allocation in the Oil Industry

7. 2 A Distributive Outcome

7. 2. 1 A Distributive Outcome through Capped Liability in Gross Negligence Cases

7. 2. 2 Policy and Regulatory Direction for a Distributive Outcome

7. 3 A Strategy to Overcome the Limitations in Allocating Gross Negligence Risk

7. 3. 1 Statutory Control

7. 3. 2 Statutory Harmonisation

7. 3. 3 Judicial Decisions and Harmonisation

7. 4 Conclusion

Bibliography

Index

Notes:

Includes bibliographical references and index.

Description based on print version record.

ISBN:

9781399517720 (electronic book)