Title: Perception of contractual risk allocation in the oil and gas contracts in Malaysia

Authors: Wan M. Zulhafiz

Addresses: Ahmad Ibrahim Kulliyyah of Laws, International Islamic University, P.O. Box 10, Kuala Lumpur, 50728, Malaysia

Abstract: Oil and gas projects are risky undertakings, which may cause severe damages to property and the environment, not to mention, personal injury and death to personnel. Contractual provision such as an indemnity and mutual hold harmless clause is used as a tool in allocating the risks. However, as a consequence of the private and government litigation arising from the Macondo oil spill in the Gulf of Mexico in 2010, evidence suggests that operators generally are seeking to modify the established approach to liability allocation through individual contract negotiations with contractors. This scenario has significant and potentially adverse financial implications for the contractors and for the long-term sustainability of the industry. An empirical study was conducted to investigate the issues and problems with regard to contractual risk allocation in oilfield service contracts in Malaysia. The methodology employed in this paper will essentially be a combination of literature review and qualitative study.

Keywords: contract law; oil and gas law; oilfield service contracts; risk allocation; empirical study; unfair contract terms; operator; contractor; standard form contracts; Macondo case; Malaysia.

DOI: 10.1504/IJTGM.2018.092483

International Journal of Trade and Global Markets, 2018 Vol.11 No.1/2, pp.127 - 137

Received: 22 Feb 2017
Accepted: 27 Oct 2017

Published online: 21 Jun 2018 *

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