Financial Security Arrangements

1
Financial Security Arrangements

• Background
• Perception that provision of security for future
  decommissioning
• obligations act as a barrier to licence trading
• Petroleum Act 1998 -DTI can require FSAs to be
  put in place
• JOAs can require FSAs to be put in place
• Revised DTI guidelines
• DTI sought cash, Letters of Credit, Performance
  Bonds
• issued by Prime Banks (AA rating or better)
• DTI may consider alternate insurance schemes
• PCGs unlikely to be acceptable to DTI

2
Current Status
DTI/ Industry discussions to consider additional
options to those set out in the
Guidelines Benefit to smaller/middle
players Give DTI same/better level of
comfort Need to progress range of measures
acceptable to the DTI and appropriate for the
industry Cash, Bank Bonds and/or
LOCs Guarantee provided by alternative UK
security provider Mutual Guarantee
Fund PCGs Sinking Fund
3
Next Steps Get agreement that security is
provided by an alternate UK security provider who
satisfies agreed criteria would be
acceptable. Get Industry/DTI agreement on
acceptable rating level for security provider (eg
start with Guidelines) JOA negotiations would be
facilitated as they would have to reflect above
OWNERSHIP OF NEXT STEPS?