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FPSO, from Woodside Petroleum in April 2016. to protect the taxpayer and the wider commu-
Its financial collapse has since raised some seri- nity”, the financial responsibility lay with cur-
ous questions around the sale of end-of-life rent owner NOGA. She added that Woodside
assets, with the Australian government having had sold the asset in a “commercial, arm’s length
stepped up its oversight of such transactions over transaction … in compliance with the law”.
the last year.
What next
Government intervention While it is not clear how much the project’s
Both US super-major ExxonMobil and Italian decommissioning and remediation will cost,
major Eni have reportedly shelved divestment estimates have varied wildly, with figures rang-
plans for the mature offshore assets, with indus- ing from AUD200mn ($154.7mn) to AUD1bn
try watchers widely citing increased government ($773.4mn).
scrutiny. Environmental campaigners argue that the
Canberra is currently reviewing the coun- oil and gas industry should be expected to rec-
try’s decommissioning regulations and, while ompense the taxpayer, noting the sector must be
the industry is waiting to see what steps will be held accountable in situations that could have
taken with regard to trailing obligations, there is serious environmental implications.
little expectation that physical costs will grow. Wilderness Society campaigner Jess Lerch
“There’s a cost to decommissioning that told Guardian Australia that the group had
doesn’t fundamentally change,” National Energy “supported the government commandeering the
Resources Australia (NERA) general manager of Northern Endeavour because the alternative was
decommissioning Andrew Taylor told the Petro- to have it rust and fall into the ocean, potentially
leum Economist in February. creating a giant oil spill”.
The government’s move to levy the entire Lerch added: “But we supported it on the pro-
industry for NOGA’s financial negligence has viso that industry would have to fully reimburse
frustrated the upstream, with APPEA arguing the taxpayer. The idea expounded by APPEA,
that an entire sector should not be punished for that taxpayers should clean up the industry’s
one company’s financial mistakes. messes, like this one, is abhorrent.”
“APPEA maintains [that] a levy is unreason- The government is likely to push ahead with its
able and a disincentive for investment at a time tax on the upstream industry, which could leave
when policy stability and certainty is critical,” an bigger developers to carry most of the burden.
unnamed APPEA spokesperson told Guard- In a May 12 research note, Wood Mackenzie
ian Australia on May 12. APPEA believes that research analyst Shaun Brady said: “The policy
options should be explored, with the spokesper- is still light on detail, with the exact costs and
son suggesting that the FPSO be sold first, with terms still to be negotiated between the govern-
remediation work left until later. ment and industry. Depending on how the levy
“We would also like to ensure that all options is designed, it is likely the bigger Australian pro-
regarding the availability of [petroleum resource ducers will bear the brunt.”
rent tax] PRRT credits are fully explored, because Whether it damages the long-term prospects
this could help defray the actual costs of decom- of end-of-life assets is another matter entirely.
missioning,” he added. Companies with the financial resources and
The spokesperson sidestepped the daily’s technical experience are unlikely to be put off
question over whether Woodside should be mature offshore opportunities by a one-off
required to foot the bill, saying simply: “There remediation tax.
are a number of other options the government The government is unlikely to enact a levy
has not yet fully investigated and we ask that they approach on a larger scale, given that future legis-
do so instead of hitting up an entire industry.” lation is expected to introduce trailing liabilities
Woodside has denied it is responsible for the that will hold previous field owners accountable
clean-up bill, with a spokesperson telling Guard- in the event a field’s current operator is unable to
ian Australia that while there was “an obligation cover the cost of end-of-life operations.
P10 www. NEWSBASE .com Week 19 13•May•2021
