$200 million clean-up bill in doubt as Pilot Energy collapses - Australian Government must demand up front bonds for oil and gas clean up

A $200 million offshore oil and gas clean-up cost is in doubt after Pilot Energy called in administrators today, following months of suspended trading on the ASX.

The Wilderness Society says the collapse is a live test of Australia's decommissioning laws, which have again failed to ensure oil and gas companies have the money to clean up after themselves. 

"This is exactly the scenario Australians were promised could never happen again after the Northern Endeavour debacle," said Amanda Holly, Corporate Campaigner at The Wilderness Society. "A small, financially fragile company has ended up responsible for an estimated $200 million clean-up bill, while clearly lacking the funds to pay for that work. 

In response to today’s news, the Wilderness Society is calling on the Australian Government to:

1. Urgently pass stalled financial assurance reforms and to ensure oil and gas companies are made to set aside dedicated funds to pay for their clean up so we don’t see this pattern repeated again and again
2. Put in place an urgent levy to ensure the oil and gas industry, not taxpayers, pay for the clean up of the Cliff Head field if neither Pilot or Triangle have the financial capacity to do so
3. Undertake a full investigation into how the situation with Triangle and Pilot was allowed to come about when it was known about by multiple government agencies.  

Ms Holly says “Pilot’s entry into administration must be the kick into gear the Australian Government needs to legislate that oil and gas companies finally pay bonds to ensure they have the money to deliver on their clean up.’

“The Wilderness Society was assured late last year that we would see financial assurance legislation. Now it's more than six months down the track, there’s no draft legislation in sight and a $200 million clean up bill that no company has the money to pay for.”

Background

The Cliff Head oil field sits off the coast of Dongara in Western Australia's Perth Basin. Production stopped in 2024, having been run by two relatively small joint venture partners, Pilot Energy and Triangle Energy.

Rather than fund decommissioning, the two companies pitched the "Mid West Clean Energy Project", a plan to convert the depleted field into an offshore carbon pollution dumping site. The federal government backed the plan with a $6.5 million funding package, paying Pilot $3 million of it in August 2024.

To clear the way for the speculative carbon pollution dumping project, Pilot agreed to buy out Triangle's 78.75% stake, taking full ownership of the field and, with it, the entirety of its future decommissioning liabilities. Triangle agreed to the sale on the understanding it would no longer be directly liable for cleaning up the Cliff Head platform and oil field.

But under amendments made to federal legislation after the financial collapse of the Northern Endeavour, Triangle remains liable if Pilot cannot pay. In response to today’s news, Triangle has suspended trading. Pilot and Triangle are together valued at less than five per cent of the cost of decommissioning. 

Neither company appears to have recognised decommissioning liability in its financial statements.

"This is a textbook case of decommissioning risk being quietly shifted onto whichever company is least able to bear it," said Amanda. "The Cliff Head deal was structured so the smaller, weaker partner ended up holding a $200 million liability. When that company folds, the question of who actually pays to clean up the ocean floor is left wide open, and that should never have been allowed to happen in the first place. That is why a full investigation is needed into the actions of federal government agencies that allowed this situation to unfold as it has.”