The Australian Government has approved a suite of measures aimed at enhancing and strengthening Australia’s offshore oil and gas decommissioning framework.
In 2018, Wood Mackenzie outlined that there were over 380 fields expected to cease production in the Asia-Pacific region in the next decade and that decommissioning Asia-Pacific’s offshore assets (nearly 2,600 platforms and 35,000 wells) could cost over US$100 billion.
The company further said that “decommissioning in the Asia Pacific appears to be a mammoth task for which the various stakeholders are largely unprepared. Unclear government regulations coupled with a general lack of experience in the region could mean a steep learning curve with high initial costs and potential for mistakes”.
Minister for Resources, Water and Northern Australia, the Hon. Keith Pitt MP, said the measures will ensure the offshore decommissioning framework is clear and fit for purpose.
“Australia’s offshore oil and gas industry has supported Australia’s energy security and economic activity for over 50 years and it will continue to be an important economic and energy security driver for the foreseeable future,” Minister Pitt said.
“The enhanced framework will make certain that there is effective regulatory oversight and robust financial and accountability safety nets for offshore oil and gas decommissioning requirements.”
“It will strengthen protections for the environment, the industry, the Australian Government and taxpayers,” he said.
The measures were developed as part of the consultation on the Offshore Oil and Gas Decommissioning Review in December 2020 and January 2021.
Key elements of the enhanced framework include:
- Strengthening existing trailing liability provisions to enable the government to call back a former titleholder in a broader range of circumstances
- Increased oversight of changes in company control
- Increased requirements for financial assurance
- Modernising field development plans and enhancing decommissioning planning
- Earlier and proactive use of remedial directions powers if required
- Improved transparency and public engagement on decommissioning.
Minister Pitt said the implementation phase has now commenced. A mix of legislation and regulation changes will support the measures, starting with the release of an Exposure Draft of a Bill to improve Australia’s offshore oil and gas decommissioning regime. The Bill is open for comment until 23 April 2021.
“The Bill also gives effect to the relevant recommendations of the Walker Review. It expands existing trailing liability provisions, increases oversight of changes in titleholder ownership and control, and increases scrutiny on companies operating, or looking to operate, within the regime,” Minister Pitt said.
The National Offshore Petroleum Administrator’s power to require this information is also being strengthened.
The framework will be implemented using a staggered approach, with further consultation with industry and other stakeholders as each measure is developed.
“It is important to strike a balance between implementing regulatory safeguards for Australian taxpayers, managing the impost on industry while encouraging continued investment in oil and gas development,” Minister Pitt said.
More information about the decommissioning review and how offshore oil and gas is regulated is available on the decommissioning framework website.