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Journal of Australian Energy Producers
RESEARCH ARTICLE (Non peer reviewed)

Liability in oil and gas: what happened in the case of Deepwater Horizon?*

L. McClurg
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- Author Affiliations

Piper Alderman.

The APPEA Journal 51(2) 668-668 https://doi.org/10.1071/AJ10048
Published: 2011

Abstract

Disasters such as the explosion of the Deepwater Horizon oil rig and the consequential pollution in the Gulf of Mexico have heightened awareness surrounding liability for such events. It is an opportune time for all companies—whether owners, operators or contractors—to closely examine their contracting regimes to ensure their interests are protected to the maximum extent possible. It is commercial reality in all industries that parties negotiating contracts seek to limit their liability. Unique to the oil and gas industry, contracts for services usually contain reciprocal indemnities, often referred to as knock for knock clauses, where each party is responsible for loss or damage to its own people and property, regardless of the cause.

Such clauses have the effect of altering the common law position where liability is usually based on the cause of any loss or damage. In this session the speaker discusses some tips and traps for drafting reciprocal indemnity clauses, and looks at how they have been interpreted by the courts. Consideration is given to how an incident like Deepwater Horizon would be treated if it occurred in Australia and an update on the US Senate Committee’s inquiry into the disaster is provided.

Leanne is a senior commercial lawyer with significant experience in mining, oil and gas. In addition to her years in private practice for major Australian law firms, Leanne also has direct industry experience having worked for the Australian arm of Sibelco Group—one of the largest industrial mineral companies in the world. She has also worked on secondment for Beach Energy. Leanne is an active member of a number of mining and petroleum related industry bodies and has written and presented on numerous subjects relevant to resources companies.


References

Deep Water: The Gulf Oil Disaster and the Future of Offshore Drilling. Report to the President—National Commission on the BP Deepwater Horizon Oil Spill and Offshore Drilling (Page xi).

Who will be held responsible for Deepwater Horizon? Oil & Gas Financial Journal. http://www.ogfj.com/ogfj/enus/index/article-tools-template.articles.oil-gas-financial-journal.e_p.offshore.Gulf_of_Mexico_oil)spill.html