South East Asia has been producing five per cent of the world's oil and gas over recent years, with Myanmar, Thailand, Vietnam, Brunei, Malaysia and Indonesia in the forefront.

But infrastructure is wearing out and oil and gas resources have been depleted, a situation that experts suggest means oil and gas firms operating in the region could face decommissioning bills amounting to over US$100 billion.

Traditional tools

Letters of credit (L/Cs) have been used for years to guarantee that operators have sufficient funds to decommission infrastructure at the end of an oil and gas field's life.

Other financing tools for decommissioning include companies directly self-insuring using specialist insurance products, or indirectly, by creating a licensed insurance company.

Some companies can self-pay by contributing to designated reclamation bonds or common bond pools held by states or regulators.

Bad experiences

But recent experiences in the Canadian province of Alberta and the US state of Texas have shown that L/Cs and other conventional tools have not provided sufficient funds for decommissioning and rehabilitation projects.

Earlier this year, the Alberta Energy Regulator ordered Trident Exploration to decommission 4,700 wells or transfer them to another company. Trident failed to comply with the order, the regulator said.

In May, Trident folded with insufficient funds for its reclamation liabilities of US$244.78 million.

Innovative solutions

To address this problem, London based start-up, Quatre, offers both an investment and insurance package under which oil and gas companies can securely and tax efficiently set aside an amount each year to fund future liabilities.

The package aims to provide stakeholders with the assurance that future decommissioning and reinstatement liabilities will be met.

This article represents the views of the author and not necessarily those of the ICC or Coastline Solutions.