Clifford Chance
Offshore Decommissioning - Australian Government publishes issues paper
The Australian Government is developing a roadmap to establish an Australian offshore decommissioning industry. It has recently released an issues paper and is seeking submissions on development of that industry.
$4.5 million has been allocated to development of the roadmap, scheduled for release in 2024. The Australian Government estimates the cost of decommissioning activity to industry in the decades ahead at A$60 billion and anticipates that the volume of decommissioning activity will dramatically increase, with approximately 5.7 million tonnes of material to be removed from offshore oil and gas facilities and projects (89% of which is offshore Western Australia).
You can find a copy of the issues paper here. The Australian Government is accepting responses to the issues paper to 20 October 2023. The issues paper focuses on 6 key themes for its roadmap, and sets out 31 questions to industry which fall broadly within those themes, summarised below:
| Theme | Questions |
| An opportunity for Australia – An Australian offshore decommissioning industry can support new jobs, opportunities and investment in Australian business as Australia moves to net zero by 2050. |
|
| Cooperating to create a sustainable decommissioning industry – The roadmap will consider cooperation and competition with adjacent and complementary industries, such as the offshore renewables industry. |
|
A secure, growing and diverse future workforce pathway – The roadmap will consider how the existing offshore resources workforce, as well as workers in related industries, can benefit from an Australian offshore decommissioning industry, including workforce participation for women, First Nations peoples and other groups who are historically underrepresented in the offshore oil and gas industry. |
|
| Business opportunities and partnerships for First Nations people – The roadmap will consider how an offshore decommissioning industry can provide real opportunities for First Nations businesses and communities across the decommissioning value chain. |
|
The circular economy and managing waste – The roadmap will consider how to maximise reuse and onshore recycling opportunities while safely handling waste streams and minimising emissions. |
|
| Regulatory frameworks – The roadmap will consider existing regulatory settings to ensure they are fit-for-purpose and international best-practice. |
|
In circumstances where decommissioning works typically do not produce positive cashflows for project operators and, accordingly, the cost of completing decommissioning works is a key consideration, the main question for the Australian Government to examine (with industry participation) will be how an Australian offshore decommissioning industry can be a cost competitive option in the broader Asia Pacific region.
Absent from the issues paper (but of key importance to industry participants) is an observation contained in The Hon Madeleine King's Statement to Parliament on offshore decommissioning introducing the roadmap and issues paper. In her Statement to Parliament, Minister King also observed that "[t]he Australian Government is now considering how we can strengthen the existing financial assurance regime for offshore oil and gas titleholders, to better insulate taxpayers against future decommissioning liabilities", specifically to "improve the Government’s ability to monitor and assess the financial mechanisms that the offshore resources industry has in place to pay for future decommissioning activity". As expected, the scars of Australia's Northern Endeavour experience continue to shape Government policy in this space.
