The insurance market issues various third party guarantees on behalf of energy exploration and production operators in the oil and gas sector. Many of these guarantees cover both onshore and offshore decommissioning obligations, and are referred to as surety bonds or surety guarantees issued by sureties or surety companies.
While contractual requirements are usually in place for the decommissioning of assets, oil and gas operators always maintain the primary responsibility. Surety guarantees can be used as an alternate form of collateral (security), freeing up cash that would usually be required under a traditional letter of credit (LOC) or bank guarantee (BG).
News article on 17 November 2022 from marsh.com
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