Is this the 'new normal' for late life oil & gas assets in Australia?
Background
In 2015, by a series of transactions, the Northern Oil & Gas Australia Pty Ltd (NOGA) group of companies acquired the Laminaria and Corallina oil fields in the Timor Sea (approximately 550km offshore of Darwin) and the associated Northern Endeavour floating production storage and offtake facility from Woodside Energy Ltd (Woodside) and Talisman Oil & Gas Pty Ltd.
NOGA’s acquisition followed an announcement by Woodside that it intended to cease production and commence decommissioning the fields in late 2016.
In early 2020, the NOGA group went into liquidation, leaving the Australian Government with responsibility to ensure the safety of the field and the marine environment. It has been speculated that the cost to remove the facilities and to rehabilitate the oil fields will be in excess of $200 million, and may be as high as $1 billion.
To ensure Australian taxpayers do not bear these costs, the Federal Government announced the introduction of a temporary levy on all offshore petroleum production in the 2021-2022 Federal Budget. The levy, to be applied at a rate of $0.48 per barrel of oil equivalent, is intended to continue until all costs associated with the decommissioning have been recovered.
