UAE Offshore Decommissioning Rules for Oil and Gas Projects

The UAE has no standalone decommissioning law

There is no single UAE statute that governs the decommissioning of offshore oil and gas installations. Operators, concession holders, and international oil companies (IOCs) working in the UAE are instead subject to a patchwork of emirate-level legislation, federal environmental law, concession-specific obligations, ADNOC codes of practice, and international treaties to which the UAE is a party. The concession agreement is the primary instrument that determines who pays for decommissioning, when it must happen, and what standard applies.

• Decommissioning and abandonment requirements are addressed in limited terms by Abu Dhabi Law No. 8 of 1978 on the Conservation of Petroleum Resources. The law sets general standards for well abandonment but does not prescribe detailed rules for facility removal or seabed restoration.
• Federal Law No. 24 of 1999 on the Protection and Development of the Environment imposes environmental obligations on all petroleum operators, including those conducting offshore decommissioning activities, with penalties for non-compliance.
• The UAE is a party to the 1989 Kuwait Protocol Concerning Marine Pollution Resulting from Exploration and Exploitation of the Continental Shelf, which permits partial removal of offshore installations subject to conditions relating to navigational safety and fishing.
• More recent concession agreements typically include express decommissioning provisions, including obligations relating to decommissioning plans, funding mechanisms, and post-cessation site restoration.

Who this applies to

Decommissioning liability in the UAE is relevant to ADNOC (as majority concession holder and de facto regulator of Abu Dhabi's petroleum sector), IOCs holding minority interests in concessions, operating companies appointed to manage concession areas, and contractors engaged to carry out decommissioning works. In Dubai, the Dubai Petroleum Establishment manages offshore petroleum assets directly, following the reversion of the ConocoPhillips concession in 2007.

For companies operating in the UAE energy supply chain, the regulatory and contractual framework for upstream operations is set out in our article on the UAE oil and gas regulatory framework. For legal support from energy lawyers in the UAE, including concession structuring, abandonment planning, and decommissioning disputes, our team advises operators, contractors, and investors across the sector.

Companies providing EPC, marine, or engineering services for decommissioning projects face a distinct set of contractual risks, particularly around scope, liability caps, and environmental indemnities, which are addressed later in this article.

What Abu Dhabi Law No. 8 of 1978 requires

The Abu Dhabi Petroleum Resources Conservation Law is the principal emirate-level legislation governing upstream petroleum operations. It covers all stages of operations from exploration through abandonment and applies to both onshore and offshore activities within Abu Dhabi's territorial waters and continental shelf.

The law contains specific provisions on the abandonment of wells, including requirements to obtain consent from the Supreme Council for Financial and Economic Affairs (formerly the Supreme Petroleum Council) before closing dry or non-commercial wells. It sets minimum standards for the process, requires the use of the most efficient scientific techniques and equipment conforming to international standards, and imposes reporting obligations on operators.

However, the law does not provide a detailed decommissioning framework for the removal of platforms, subsea infrastructure, or pipelines. It does not prescribe how decommissioning costs should be allocated between concession partners, nor does it require the establishment of a dedicated decommissioning fund. These matters are left to the concession agreements.

The operator must also pay compensation to the government, in addition to indemnifying the loss of reservoirs, for any waste of hydrocarbons resulting from failure to adhere to standard petroleum practice. This creates a direct financial exposure for operators who mishandle well abandonment.

Federal environmental obligations

Federal Law No. 24 of 1999 on the Protection and Development of the Environment applies across the UAE and imposes additional obligations on offshore petroleum operators. The law requires operators conducting petroleum activities (including exploration, drilling, extraction, and production) to carry out periodic environmental monitoring and to take all necessary precautions to prevent contamination of air, soil, and water.

Any decommissioning activity that could affect the marine environment requires an environmental impact assessment (EIA) under Article 4 of the Environmental Law. The assessment must be submitted to the relevant competent authority before the project proceeds. In Abu Dhabi, the Environment Agency (EAD) handles environmental permitting; in Dubai, the Environment Department of Dubai Municipality is the relevant body.

Penalties under the Environmental Law are strict. Breaches of the pollution and waste disposal provisions can result in fines ranging from AED 10,000 to AED 1 million, imprisonment of up to five years, and orders to remediate the environmental damage caused. These penalties apply to the operator and can extend to individual officers responsible for the breach.

How concession agreements allocate decommissioning liability

Because the UAE has no consolidated petroleum legislation and no model-form concession agreement, the decommissioning obligations of each concession holder are determined by the specific terms of their concession. Abu Dhabi's major concessions, including ADNOC Onshore (formerly ADCO) and ADNOC Offshore (formerly ADMA-OPCO), each contain their own provisions.

In recent concession agreements, the following elements are typically addressed:

The Supreme Council for Financial and Economic Affairs expects that the entity party to the concession agreement is the parent company of the relevant group, or that the parent company guarantees the performance of the concession holder's obligations. This creates a chain of liability that extends beyond the local operating entity to the ultimate parent.

International treaties that apply to UAE offshore decommissioning

The UAE's obligations under international law add a further layer to the decommissioning framework. Three instruments are particularly relevant.

The 1982 United Nations Convention on the Law of the Sea (UNCLOS). Article 60(3) requires that abandoned or disused offshore installations be removed to ensure safety of navigation, taking into account generally accepted international standards. UNCLOS permits partial removal where full removal is not feasible, but the coastal state must give appropriate publicity to the depth, position, and dimensions of any remaining structure.

The 1989 IMO Guidelines and Standards for the Removal of Offshore Installations (Resolution A.672(16)). These guidelines establish a general obligation to remove abandoned or disused installations, subject to exceptions for installations that are too large or technically difficult to remove, installations that serve a recognised purpose such as marine research, or installations where removal would cause greater environmental harm than leaving the structure in place. The IMO guidelines require all new installations placed on the seabed after 1 January 1998 to be designed and built so that entire removal is feasible.

The 1989 Kuwait Protocol Concerning Marine Pollution Resulting from Exploration and Exploitation of the Continental Shelf. As a party to this protocol, the UAE is required to empower its national authorities to require operators of offshore installations to remove the installation, in whole or in part. The protocol permits partial removal where this serves the interests of navigational safety and fishing. The regional organisation (the Marine Emergency Mutual Aid Centre, MEMAC) has not yet issued specific guidelines on decommissioning, which leaves the practical standard largely to national law and contractual terms.

ADNOC's role as de facto regulator

ADNOC acts as both a commercial participant and the environmental regulator of Abu Dhabi's oil and gas industry. In practice, this means that ADNOC sets the operational and HSE standards that govern decommissioning through its codes of practice and its health, safety, and environment management system. ADNOC's group companies, including ADNOC Offshore, ADNOC Onshore, and ADNOC Gas Processing, are required to develop and implement programmes compatible with these standards.

For IOCs and their contractors, ADNOC's codes of practice function as binding operational requirements, even though they are not legislation. Non-compliance can result in contractual remedies under the concession agreement, and in some cases, the refusal to approve a decommissioning plan. The interaction between ADNOC's commercial interests (as majority concession holder) and its regulatory role creates a unique dynamic that operators must account for when planning decommissioning activities.

Decommissioning risks in asset transfers

When a concession interest or participating interest is transferred, decommissioning liability is a central commercial issue. The relevant emirate's approval is required before any transfer of concession rights, and the buyer will need to satisfy the Supreme Council for Financial and Economic Affairs that it has the financial and technical capacity to meet decommissioning obligations.

Sellers face the risk that residual decommissioning liability survives the transfer. In many jurisdictions, former concession holders retain secondary liability for decommissioning costs if the current holder defaults. While the position in the UAE depends on the terms of the specific concession, sellers should assume that obligations may follow them unless the concession agreement expressly releases them upon transfer. Parent company guarantees compound this exposure.

For buyers, the due diligence question is whether the decommissioning fund (if one exists) is adequately provisioned, whether the estimated cost of decommissioning is realistic, and whether the technical condition of the installation creates risks that are not reflected in the purchase price. Our article on due diligence in UAE M&A transactions sets out the broader framework for asset-level and entity-level due diligence.

Dispute risks in decommissioning contracts

Companies engaged to carry out decommissioning works (well plugging and abandonment, platform removal, pipeline decommissioning, seabed remediation) face contractual risks that are distinct from standard construction or engineering projects. Decommissioning scopes are inherently uncertain: the condition of ageing infrastructure may not be fully known until work begins, environmental contamination may exceed initial assessments, and regulatory requirements may change during the project.

The most common dispute areas include scope changes and variation claims arising from unforeseen conditions, disagreements over whether the contractor met the contractual standard for site restoration, liability for environmental damage discovered during or after decommissioning, and the enforceability of liability caps where the operator seeks to pass through government-imposed remediation costs.

For contractors working on energy sector projects, including decommissioning, our article on UAE energy EPC contracts: dispute risks, claims, and arbitration covers the claim mechanisms, time bars, and arbitration provisions that typically apply. The ESG and environmental reporting obligations that intersect with decommissioning are addressed in our article on ESG obligations for private companies in the UAE.

What companies should do next

The absence of a detailed statutory framework makes the concession agreement the single most important document for any company with decommissioning exposure in the UAE. Companies should review the decommissioning provisions of their concession or participation agreement to confirm the scope of their obligations, the cost-sharing mechanism, and the conditions under which liability can be released.

Where a decommissioning fund exists, companies should assess whether contributions are on track and whether the estimated decommissioning cost remains current. Cost estimates prepared at the start of a 40-year concession are unlikely to reflect current market conditions, and the gap between the fund balance and actual decommissioning costs is a material financial risk.

Companies involved in asset transfers should address decommissioning liability explicitly in the sale and purchase agreement, including indemnity provisions, escrow arrangements, and the allocation of pre-existing environmental contamination. The regulatory framework for decommissioning in the UAE is likely to develop as older concessions approach expiry and as the energy transition accelerates; companies should flag this as an area requiring periodic review.

This article is also relevant to businesses in construction, maritime and logistics, and financial services.

Legal advice may be required to assess how decommissioning obligations interact with concession terms, environmental permits, and cross-border parent company guarantees.

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