On 26 May 2021, the Australian Government introduced the Offshore Petroleum and Greenhouse Gas Storage Amendment (Titles Administration and Other Measures) Bill 2021 and the Offshore Petroleum and Greenhouse Gas Storage (Regulatory Levies) Amendment Bill 2021 into Parliament.
As Australia’s oil and gas industry matures, there are an increasing number of projects and assets reaching end of life in the next 30 years, with an estimated decommissioning liability of A$60 billion. The regulatory framework and the posture of the regulator, will need adapt to meet the changing needs of the offshore industry, which is beginning to focus on mid-to-end of life activities, while also remaining attractive to encourage new investment in the regime.
A RIS, considering three options, was prepared to support the Australian Government in approaching this problem. The options considered were:
- maintain the status quo – this was not considered a viable option and as does not address the underlying issues in the existing regulatory framework and would be unable to address the longer term needs of government or industry.
- objective-based regulatory amendments with an expansion of the trailing liability provisions – this option is anticipated to deliver the greatest net benefit. Although the liquidation of the NOGA group of companies was an unprecedented event in the history of Australia’s offshore regime, the avoided costs to the Commonwealth and to the Australian taxpayer would far exceed any anticipated regulatory impacts to industry, if the changes where to prevent just two similar situations over the next thirty years; and
- prescriptive regulatory amendments with a stand-alone trailing liability obligation – this option would deliver equal regulatory benefits to option 2 but would have significant additional regulatory impost on industry with little to no improvement in policy outcomes.
DISER prepared and certified a Regulation Impact Statement (RIS), which the Office of Best Practice Regulation (OBPR) assessed as good practice.