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AN INTERNATIONAL CONVENTION ON OFFSHORE HYDROCARBON LEAKS?

Lloyd's Maritime and Commercial Law Quarterly

AN INTERNATIONAL CONVENTION ON OFFSHORE HYDROCARBON LEAKS?

Steven Rares*

Recently, two major blowouts have occurred from offshore oil rigs—Montara, off Australia’s coast, and Deepwater Horizon, off the coast of the United States of America. This article considers the need for an international Convention to regulate the liabilities of those involved or otherwise concerned in developing, owning, controlling or operating offshore hydrocarbon exploration and extraction together with the rights of states and persons to compensation from those persons when leaks or spills occur. It is argued that there is an imperative need for an international Convention to deal with the risks of damage from future offshore oil and gas exploration and exploitation activities. A possible framework of regulation is proposed, involving layers of protection, guided by relevant features of the International Convention on Civil Liability for Bunker Oil Pollution Damage 2001, followed by supplementation from further funds such as that provided in the International Convention on the Establishment of an International Fund for Compensation for Oil Pollution Damage 1992 and the Protocol of 2003 to that Convention.

INTRODUCTION

As the world’s known resources of hydrocarbons are diminishing, there has been an increase in the search for and attempted recovery of oil and gas from offshore wells. Some estimates suggest that there are over 1,500 offshore oil and gas installations worldwide.1 In the last two years, two major spills from offshore wells have occurred, one off the north-west shelf of Western Australia from the Montara platform, the other off the Gulf of Mexico from the Deepwater Horizon rig. Pollution from those spills affected the waters and coastlines of both the states that authorised the drilling and those of neighbouring states. The costs of cleaning up each spill were considerable. And, particularly in the Deepwater Horizon case, many persons, such as fishermen and those with businesses in littoral towns, claimed to have suffered economic loss. In the United States of America there was an outcry when it was suggested that BP, the multinational oil company, one of
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