This page belongs to: Trailing liability for decommissioning of offshore petroleum property: guidelines

Introduction

1.1. Decommissioning is a normal activity in the lifecycle of an offshore petroleum project. Its purpose is to remove or otherwise satisfactorily deal with structures, equipment and property previously used to support oil and gas activities in the offshore area. This includes: 

  • plugging and abandoning wells
  • removing property
  • rehabilitating the site
  • carrying out any necessary monitoring.

These activities must be done in a safe and responsible manner. 

1.2. The Australian Government announced in April 2021 that it would enhance Australia’s framework for the decommissioning of offshore oil and gas infrastructure.[1] This would involve a suite of policy measures to strengthen and build on the existing provisions for decommissioning in the Offshore Petroleum and Greenhouse Gas Storage Act 2006 (OPGGS Act) and regulations. 

1.3. The Australian Parliament passed amendments to the OPGGS Act in August 2021 to implement some key elements of the framework. The amendments included provisions to expand the existing remedial direction provisions under the OPGGS Act. This enables former titleholders, related bodies corporate or related persons of current or former titleholders, to be called back to undertake remedial work, if required. These provisions are referred to through this guideline as the ‘trailing liability provisions’. For more information on related persons, see Section 3: Trailing liability.

1.4. The government expects titleholders to proactively plan for decommissioning at all times during the lifecycle of a petroleum activity. Titleholders must undertake due diligence when selling their assets to other entities. The strengthened trailing liability provisions ensure that the risks and liabilities of petroleum activities remain the responsibility of the petroleum industry.

1.5. The expanded remedial direction provisions are in effect from 2 March 2022. They apply to titles, and their relevant titleholders and related persons, as they existed on or after 1 January 2021. Please see Section 3: Trailing liability.

1.6. Remedial directions can also be issued in relation to titles that ceased to be in force, and/or to titleholders that ceased to hold a title, before 1 January 2021. Please see Section 4: Trailing liability: ownership ceased before 1 January 2021.

1.7. The suite of policy measures announced by government will strengthen the decommissioning policy and regulatory framework overall and ensure early planning and appropriate funding is in place to meet decommissioning obligations. In the context of the strengthened regime, trailing liability is intended as an option of last resort and is expected to be used rarely. The primary obligation to decommission will remain with the current titleholder.