The newly passed Offshore Petroleum and Greenhouse Gas Storage Amendment Bill will force oil and gas producers to pay for the cost of decommissioning offshore rigs to ensure taxpayers are not left to foot the bill.
Federal minister for Resources and Water Keith Pitt told parliament that the cost of removing offshore rigs from the ocean would be approximately $43 billion over the next 30 years.
Although offshore energy companies sign agreements in order to gain government approval at the start of production, loopholes have allowed them to pass liability to another company if the production facility is sold before their statutory end of life.
The new Bill gives the government callback powers to force previous owners of an asset to pay for decommissioning if the current owner cannot. The law also creates a trailing liability for the energy giants, which applies retrospectively from January 1, 2021.
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“The trailing liability provisions will be an action of last resort when all other safeguards have been exhausted and will reduce the risk that the financial costs of decommissioning will be left to Australian taxpayers,” Mr Pitt said.
“It also sets the expectation that sellers will undertake appropriate due diligence before selling assets, titles and infrastructure, so they can avoid being called back to decommission and remediate title areas.”
The new law largely comprises recommendations of Steve Walker, who last year was appointed by Mr Pitt to look into circumstances leading up to the liquidation of Northern Oil and Gas Australia Ltd (NOGA), which owned the Northern Endeavour floating production storage and offloading (FPSO) unit moored in the Timor Sea, 300nm northwest of Darwin City.
Northern Endeavour is currently being decommissioned by the Australian Government.
