Risk Allocation and Distributive Justice in the Energy Industry: Law, Policy and Practice

Brings the concept of gross negligence to the fore and highlights how distributive justice forms a better foundation for risk allocation in the offshore energy industry.

• Assessed the practice of risk allocation in gross negligence cases in offshore petroleum drilling contracts
• Presented a public policy perspective on risk allocation in offshore drilling contracts
• Discussed gross negligence as a sui generis risk and provides a definitional pathway for determining when gross negligence has occurred and how it should apply to offshore energy drilling contracts to encourage a pollution-free drilling operation
• Advanced the concept of distributive justice as a basis for risk allocation between participants when a downside arises due to gross negligence

This book examines the practice of risk allocation in the offshore energy industry through the public policy lens and offers a novel perspective on the concept of gross negligence in risk allocation. This perspective is founded on the proportionality element of distributive justice in burden distribution. The assessment of how mutual indemnity clauses apply as an absolute shield against liability arising from gross negligence reveals that moral hazard can result from the practice.

In the analysis, this book considers the risk allocation practice in PSC and Concession regimes and how parties' liability is determined in drilling contracts. This book considers gross negligence a sui generis risk and provides a definitional pathway for determining when gross negligence occurs and how it should apply to offshore drilling contracts. Thus, it advances an environmental sustainability approach to offshore petroleum drilling operations. This book will be useful to operators and contractors, resource-rich countries, insurance companies, practitioners, scholars, and academics interested in risk allocation in the petroleum industry.