Legal Regime of Floating, Production, Storage and Offloading

Document Type : ISI

Authors

1 Assistant Professor, Faculty of Law and Political Science, Allameh Tabatabaei University, Tehran, Iran.

2 Master's student in Oil and Gas Law, Faculty of Law and Political Science, Allameh Tabatabaei University, Tehran, Iran.

Abstract

 Introduction
In recent decades, the global depletion of onshore hydrocarbon reserves has prompted the oil and gas industry to move increasingly toward offshore and deep-sea fields. Among the offshore facilities developed to address these challenges, Floating Production, Storage, and Offloading units (FPSOs) have emerged as one of the most flexible and cost-effective solutions. FPSOs perform multiple functions, producing, processing, storing, and offloading hydrocarbons, without the need for permanent pipeline connections or fixed platforms. However, their dual nature has generated significant legal ambiguities: should these units be considered “ships” under maritime law or “fixed offshore installations” under the legal regime of continental shelf operations? This question carries profound implications for areas such as liability limitation, pollution compensation, ownership transfer, registration, insurance, and the application of international conventions. The present study investigates the legal status of FPSOs through a descriptive–analytical approach, focusing on international conventions, IMO guidelines, and judicial precedents from different jurisdictions.
Methodology
The research adopts a qualitative, descriptive–analytical method. It examines the dual legal nature of FPSOs by comparing their structural characteristics with their operational behavior and legal treatment under international maritime conventions. The key instruments analyzed include the International Convention on Limitation of Liability for Maritime Claims (LLMC 1976) and the International Convention on Civil Liability for Oil Pollution Damage (CLC 1969), as well as the MARPOL, SOLAS, and STCW conventions and related IMO circulars. A comparative analysis of case law, notably the Slops case, the Cossack Pioneer decision by the Australian Administrative Appeals Tribunal, and Perks v. Clark, was undertaken to identify practical interpretations by courts and authorities. The study also incorporates guidance from the IMO regarding safety, environmental, and training provisions applicable to FPSOs and FSUs (Floating Storage Units).
Conclusions
The study concludes that FPSOs, while sharing visual and mechanical similarities with ships, must be legally categorized according to their operational phase. As long as the riser is connected and production is underway, the FPSO functions as a fixed offshore installation, excluded from maritime conventions such as LLMC and CLC. Once the riser is disconnected and the unit is capable of movement, whether by its own propulsion or towing, it becomes a ship, thereby subject to the legal regime applicable to vessels, including the conventions on limitation of liability and oil pollution damage.
This functional and situational approach best accommodates the complex reality of FPSO operations. It also aligns with the principle of narrow interpretation of limitation regimes in maritime law, ensuring that the application of LLMC and CLC remains exceptional. Furthermore, adopting a dual legal recognition model harmonizes with IMO’s technical guidance and international judicial practice, promoting legal certainty and uniformity in offshore operations.
Ultimately, the research underscores the necessity of a pragmatic hybrid regime for FPSOs, one that respects their unique engineering and operational characteristics while ensuring accountability and environmental protection. Legislators and contracting parties in the offshore sector must therefore tailor their contractual and regulatory frameworks to the dual identity of FPSOs, applying maritime conventions only when these units operate as vessels and enforcing offshore safety and environmental regimes when they act as fixed installations.
 
 
 

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References

منابع
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      DOI:10.22066/cilamag.2016.23530  [in Persian]
Journal Of Researches Energy Law Studies
Volume 11, Issue 1
September 2025
Pages 99-120

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