Our department is decommissioning the Northern Endeavour floating production, storage and offloading (FPSO) facility and remediating the Laminaria-Corallina oil fields. The OP Levy recovers the decommissioning and remediation costs from oil and gas companies.
The levy ensures the public don’t pay for these activities.
About the levy
The Australian Government passed the Offshore Petroleum (Laminaria and Corallina Decommissioning Cost Recovery Levy) Act 2022 to create the OP Levy. It took effect on July 2021.
Registered holders of petroleum production licenses under the Offshore Petroleum and Greenhouse Gas Storage Act 2006 pay the levy.
The OP Levy applies to each financial year from 1 July 2021 to 1 July 2029. It will end on 30 June 2030 at the latest. The Australian Taxation Office (ATO) collects the levy each financial year and publishes the amount in its annual report.
If the government recovers its costs before 1 July 2029, the Minister for Resources may end the levy early to prevent over-collection of funds.
What the levy covers
The OP Levy covers the costs the Australian Government or contracted suppliers incur for Northern Endeavour decommissioning-related activities.
These include:
- operating and maintaining the Northern Endeavour, wells and infrastructure
- decommissioning and preparing for decommissioning
- getting relevant insurances
- disconnecting, removing and disposing of the FPSO
- suspending, plugging (whether temporary or permanent) and abandoning wells in the Laminaria and Corallina oil fields and flushing of associated pipelines
- removal or any other treatment of subsea infrastructure from the Laminaria and Corallina oil fields
- associated environment remediation.
How the ATO calculates the levy
Registered holders of petroleum production licenses must report how much petroleum they produced in the previous financial year to the ATO by 31 December.
The ATO works out how much a registered holder owes by applying the levy rate. This is $0.48 per barrel of oil equivalent (BOE) applied to the number of barrels of petroleum recovered.
Once the ATO receives all reports, it reviews the information and issues companies with a notice of assessment. The notice outlines the total levy the company must pay in 21 days.
Read more about how the ATO calculate the OP Levy on their website.
How much the ATO has collected
The ATO’s annual reports detail the amount of OP Levy revenue collected in each financial year so far.
| Levy collection year | Total aggregate levy revenue | Source * |
|---|---|---|
| 2021–22 | $391 million | ATO annual report 2022–23 |
| 2022–23 | $389 million | ATO annual report 2023–24 |
| 2023–24 | $375 million | ATO annual report 2024–25 |
* The ATO collects and reports levy income for each financial year in the next financial year, as shown in the reports. This is because companies have up to 31 December to lodge their OP Levy return for the year ending 30 June.
How we’re using the funds
This is the first time the Australian Government has undertaken a decommissioning and remediation program of this kind. Our department needs a broad range of services to complete the program.
The Australian Government awards all contracts for services in line with the Commonwealth Procurement Rules.
Northern Endeavour program contracts
Austender’s website has details of all contracts awarded for the Northern Endeavour decommissioning program over $10,000.