Actas de congresos
Financial Assurance Bonds: An Incentive Mechanism For Environmental Compliance In The Oil Sector
International Conference On Health, Safety And Environment In Oil And Gas Exploration And Production. , v. , n. , p. 965 - 974, 2002.
The present paper describes different financial assurance systems (bonding systems) used to provide economic incentives for environmental compliance within the oil sector. Bonds may be applied in all phases of oil projects to reduce the risk of accidental, continuous, and, mainly, ex post environmental damages. The most common application of bonds is aimed at guaranteeing or funding end-of-leasing obligations, including closure and decommissioning operations. Currently, there are several forms of instruments available that could satisfy bonding requirements. This paper discusses some of the main characteristics and attributes of such instruments according to the perspectives of both regulators and industry. Since bonding requirements are currently present in several parts of the world, based on a hypothetical scenario, this paper proposes a model to enable lessees to anticipate and measure potential financial impacts of such requirements on the cash flow of oil projects. In order to provide optimum flexibility for lessees, the model offers four instrument options: (1) surety bonds, (2) a paid-in cash account, and (3) a special account allowing periodic payments. This methodology identifies surety bonds as the best instrument choice, allowing NPV maximization under the hypothetical regulatory regime.965974(1998) Financial Security - Risk Assessment Model, , Alberta Environmental Protection, Land Reclamation Division. Internal Draft Publication. 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