Page 14 - AsianOil Week 26 2021

AsianOil OCEANIA AsianOil

Australia proceeds with decomm

plans, despite developer frustration

POLICY THE Australian government is moving ahead
with plans to decommission a stranded floating
production storage and offtake (FPSO) vessel at
the cost of the offshore upstream sector – a move
that has drawn fire from developers.
Australian Resources Minister Keith Pitt
announced on July 1 that his department had
published a request for expressions of interest
(REOI) for the first phase of decommission
works on AusTender. The deadline for responses
is July 29.
The first phase of works will involve decom-
missioning and disconnecting the Northern
Endeavour FPSO from the associated Laminaria
and Corallina oilfields in the western Timor Sea.
Remediation of the fields, which are located in
production licences WA-18-L and AC/L5 in the
northern Bonaparte Basin in around 400 metres
of water, will not be included in this phase of
works.
“The Australian government committed to
decommission the Northern Endeavour last
December to remove potential future risks to
the environment,” Pitt said. “The department
intends to use this process to shortlist organi-
sations for a more detailed request for proposal
[RfP] stage later in the year.”
Canberra moved to take control of the FPSO decommissioning the Laminaria-Corallina oil-
after operator Northern Oil & Gas Australia fields and associated infrastructure have been
(NOGA) entered voluntary administration in recovered.”
September 2019 and left only a skeleton crew Leading upstream industry body, the Aus-
running the vessel from November 2019. NOGA tralian Petroleum Production and Exploration
bought the two production licences, along with Association (APPEA), condemned the levy this
the 170,000 barrel per day (bpd) FPSO, from week, describing it as “over the top” and a “terri-
Woodside in 2016. ble precedent”.
Pitt said in May that the government intended APPEA CEO Andrew McConville said on
to introduce a levy on offshore oil and gas pro- June 29 that the levy would see offshore devel-
ducers to pay for the cost of the decommission- opers “footing a massive bill” for a project they
ing work, insisting at the time that taxpayers had no involvement with. He added: “To slug an
should not foot the bill. entire industry AUD0.48 per barrel and not put
While the news elicited protests from develop- an end date on it is over the top.”
ers at the time, the government has proceeded with McConville argued that the “extreme” nature
its plans and has begun discussing potential rates. of the levy would serve as a major disincentive
to investment and could have “serious repercus-
Decommissioning costs sions” for Australia’s economy.
The Australian Department of Industry, Sci- NOGA’s financial collapse has already raised
ence, Energy and Resources published a dis- serious questions around the sale of end-of-life
cussion paper on the decommissioning levy assets, with the Australian government stepping
on June 24, suggesting that a rate of AUD0.48 up its oversight of such transactions.
($0.36) per barrel of oil equivalent could be Industry watchers have speculated that the
applied to all offshore production. The levy, increased level of scrutiny was behind both US
which will be overseen by the Australian Tax super-major ExxonMobil and Italian major Eni’s
Office (ATO), would be applied from July 1 decision to shelve divestment plans for mature
and would be charged on an annual basis, in offshore assets.
arrears, from July 2022. McConville called on the government to avoid
The paper notes: “The legislation will “washing its hands” of the Northern Endeavour sit-
be drafted in such a way to end once the uation by taxing the industry rather than working
costs incurred by the Commonwealth of with it to find alternative solutions.™

P14 www. NEWSBASE .com Week 26 01•July•2021