Recent Trends in Allocation of Risk Post-Macondo: The Growing Tension between Oil and Gas Standard Forms of Contract, and Contractual Practice

International Energy Law Review (I.E.L.R) (5). pp. 174-183, 2017

Posted: 15 Oct 2017 Last revised: 16 Oct 2017

See all articles by Wan Zulhafiz Zahari

Wan Zulhafiz Zahari

International Islamic University of Malaysia (IIUM) - Ahmad Ibrahim Kulliyyah of Laws

Date Written: October 13, 2017

Abstract

The oil and gas industry is exposed to substantial risks and huge liabilities, due to its nature dealing with wide ranges of activities that engage volatile hydrocarbons. The risks mostly involve people, property, and the environment. A contractual provision such as an indemnity and mutual hold harmless clause is used as a tool in allocating the risks. However, some of the contractual indemnification provisions that are employed in the industry were criticised for being biased particularly subsequent to the Macondo disaster in the Gulf of Mexico in 2010. It is claimed that operators have attempted to depart from the established standard model forms of contracts and to shift greater risk to the contractor in the event of a catastrophe. This problem could lead to financial detriment and unfairness to the contractor. This paper seeks to analyse such phenomenon and the Macondo case. It will be carried out in a descriptive, analytic, and prescriptive manner.

Keywords: oil and gas law, contract law, energy law

Suggested Citation

Zahari, Wan Zulhafiz, Recent Trends in Allocation of Risk Post-Macondo: The Growing Tension between Oil and Gas Standard Forms of Contract, and Contractual Practice (October 13, 2017). International Energy Law Review (I.E.L.R) (5). pp. 174-183, 2017, Available at SSRN: https://ssrn.com/abstract=3052103

Wan Zulhafiz Zahari (Contact Author)

International Islamic University of Malaysia (IIUM) - Ahmad Ibrahim Kulliyyah of Laws ( email )

P.O. Box 10, 50728
Kuala Lumpur
Malaysia

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