Australia’s federal parliament has passed novel legislation to strengthen the nation’s offshore oil and gas regulatory framework.
The bill aims to strengthen and clarify the offshore oil and gas regulatory framework by expanding existing trailing liability provisions, increasing oversight of changes in titleholder ownership and control, increasing regulatory scrutiny of the suitability of companies operating — or looking to operate — within Australia’s offshore petroleum regulatory regime.
The changes enhance Canberra’s oversight and scrutiny of a range of company transactions to ensure that entities that want to operate in the oil and gas industry are suitable and have the financial resources and technical capability to operate and decommission safely.
The changes also expand the government’s ability to call on a previous titleholder to pay for decommissioning and environmental remediation if they sell a title and the new titleholder is then unable to meet their financial obligations.
Minister for Resources & Water Keith Pitt on Thursday said the legislation makes sure taxpayers are not left to pick up the costs of future decommissioning work on offshore oil and gas projects.
“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,” 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.”
Administration will also be improved, enabling electronic lodgement of applications and documents, the minister said.
The measures in the bill, which will start six months after royal assent, were developed following extensive consultation with industry.
The measures adopt recommendations from the Walker Review, which looked into the circumstances leading to the liquidation of Northern Oil & Gas Australia (Noga).
Noga in 2019 went into administration leaving the Northern Endeavour floating production, storage and offloading vessel stranded off the Australian coast.
The Australian government only recently invited expressions of interest for the first phases of decommissioning of the stranded floater, plus associated infrastructure at two oilfields.
Pitt said the legislative changes built on a robust regulatory framework that has supported the offshore oil and gas industry, which “has delivered enormous benefits to Australia through investment, exports and employment over the past 50 years”.
“The measures strike the right balance between investment in the offshore oil and gas industry and managing a maturing industry, demonstrating this government’s ongoing commitment to a best practice, globally recognised oil and gas sector.”
The measures in the Offshore Petroleum and Greenhouse Gas Storage Amendment (Titles Administration and Other Measures) Bill 2021 passed the Australian parliament on 24 August. It will become law six months after they receive Royal Assent, with the trailing liability provisions applying from 1 January 2021.
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