Preamble

The report introduces voluntary principles to address regulatory gaps in oil and gas asset transfers across jurisdictions. It aims to ensure consistent governance standards for sellers and buyers, supporting an orderly transition to a low-emissions, climate-resilient economy while protecting governments, communities and other stakeholders.

Introduction

Asset disposals are increasing as companies respond to climate pressures and reposition portfolios. However, transfers can shift environmental and financial liabilities to less capable operators, raising risks of underfunded decommissioning, reduced oversight and higher emissions. The report highlights the need for stronger practices to prevent value leakage and unmanaged liabilities.

Principle 1: Decommissioning obligations and sales & purchase agreements

Companies should ensure that decommissioning liabilities are fully accounted for and legally enforceable in transactions. Agreements should clearly allocate responsibilities, include financial assurance mechanisms and avoid transferring assets without adequate provisions. This reduces the risk of orphaned assets and unfunded clean-up costs, which can otherwise fall on governments and taxpayers.

Principle 2: Counterparty due diligence

Sellers should conduct robust due diligence on buyers’ financial strength, technical capability and governance standards. This includes assessing their ability to manage environmental risks and meet long-term liabilities. Transactions should avoid transferring assets to undercapitalised or less competent entities, which can increase operational, financial and reputational risks.

Principle 3: Transparency

Greater disclosure is required around asset sales, including terms, liabilities and emissions impacts. Transparent reporting enables investors, regulators and stakeholders to assess risks and ensures accountability. The report emphasises consistent disclosure of decommissioning provisions, financial assurances and the climate implications of transactions.

Principle 4: Engagement

Companies should engage proactively with regulators, investors, host governments and affected communities throughout the transaction process. Effective engagement supports better oversight, aligns expectations and mitigates social and environmental risks. It also helps ensure that asset transfers contribute to a just and orderly energy transition rather than shifting burdens to weaker stakeholders.