The exploration and exploitation of petroleum in the offshore creates the risk of accidental oil spills and other forms of pollution. In accordance with the polluter pays principle, the Ghanaian petroleum regime allocates the costs of offshore pollution cleanup to the responsible oil company. However, allocating pollution cleanup liability does not guarantee that funds will be available to cover the costs of cleanup unless there are mechanisms to ensure payment.
Given that oil companies could become insolvent or judgment-proof and may fail to pay the costs of cleanup, the thesis argues for a pre-payment mechanism in the form of compulsory insurance to ensure that the polluter eventually pays. Such a requirement may also induce oil companies to adopt optimal care levels to prevent pollution. The thesis concludes that the proposal to institute a compulsory insurance scheme in Ghana’s upstream industry is appropriate and suggests measures to improve the proposed scheme.