New analysis shows offshore oil and gas clean up costs equal to the combined current market capital of Woodside and Santos

On 18 November 2025, the Australian Government released new analysis on the costs of decommissioning Australia’s offshore oil and gas industry. 

The report, undertaken by energy analysis firm Xodus, shows that accounting for inflation at 2.5 per cent, decommissioning represents a total $66.8 billion liability by 2063.  

To put it in context, the current best estimate of cleaning up Australia’s offshore oil and gas sector’s mess is close to the combined current market capital of Woodside ($48 billion) and Santos ($20 billion), demonstrating how significant a liability these costs are to Australia’s offshore oil and gas sector and how precarious the finances of this sector really is. 

While Xodus’ analysis makes an important contribution to transparency around Australia’s decommissioning costs, the Wilderness Society warns this analysis likely underestimates the true cost of cleaning up the industry because it:

• Excludes the cost of cleaning up wells, platforms and some pipelines in state waters (which include sizeable fields encompassing locations like Varanus, Thevenard and Barrow island which have costs in the billions)
• Excludes the cost of new projects from the last 15 months, like Santos’ Barossa project
• Is based on assumptions in many cases like depth and weight of seabed-located infrastructure because of the lack of transparency from the companies involved
• Assumes the very low inflation rate of 2.5 per cent
• Relies on UK data for the difference between predicted and actual costs of decommissioning, while acknowledging the UK is a poor substitute for Australian conditions
• Assumes efficiencies can be achieved via industry developments yet to be realised, such as waste supply chains and shared facilities
• Assumes vessel costs won’t be impacted by shortages, an assumption that may be unlikely given growth of the offshore wind industry and the global decommissioning task. 

Xodus’ analysis acknowledges the estimate could vary by up to 100 per cent, meaning the total cost of decommissioning Australia’s offshore oil and gas industry could be closer to $87 billion (at current value) or $133 billion (accounting for inflation). 

Quotes attribution to Wilderness Society Fossil Fuel industry campaigner Fern Cadman:

“This new analysis confirms just how significant clean up costs are for Australia’s oil and gas sector. Yet the true price tag for cleaning up Australia’s oil and gas industry is likely far higher than the $66 billion figure in the report. Xodus’ analysis excludes infrastructure in state waters and new projects from the past year. It assumes low inflation, current access to vessels, relies on UK data and assumes industry developments such as supply chains and shared facilities that we’ve yet to see. Even the report acknowledges that the cost estimate could vary by up to 100 per cent.” 

“Australia’s oil and gas regulator must increase vigilance to ensure companies like Woodside and Santos are getting their clean up done while they are still profitable. Without strong regulation, there’s a huge risk that when clean up comes due, companies simply won’t have the money, leaving a toxic mess in the ocean and taxpayers with the bill.”