New offshore oil and gas levy a direct consequence of industry-requested under-regulation

• The industry levy announced in the Budget is now the only sensible way to ensure the the Northern Endeavour mess is cleaned up
• Decommissioning of offshore oil and gas infrastructure cannot and should not ever become the taxpayers’ problem
• The industry has brought this on themselves by not supporting stronger regulation to manage this rapidly emerging problem prior to the Northern Endeavour debacle

Last night’s Budget has included a levy on the oil and gas industry to ensure that the Australian taxpayer does not need to foot the now unknown decommissioning bill to clean up after the Northern Endeavour. The owner of the Northern Endeavour, Northern Oil and Gas, went into liquidation in February 2020, after being shut down the previous year by the offshore oil and gas regulator after it found corrosion issues that could lead to a major accident event causing multiple fatalities and environmental damage. 

The facility was previously owned by Woodside, which sold the Northern Endeavour to Northern Oil and Gas as a late-in-life asset just three years prior to the shut down.

Jess Lerch, the National Corporate Campaigner for the Wilderness Society said, “The Northern Endeavour debacle shone a light on a serious taxpayer liability sitting in our oceans that should have been dealt with years ago.

“We supported the Government commandeering the Northern Endeavour because the alternative was to have it rust and fall into the ocean, potentially creating a giant oil spill. But we supported it on the proviso that industry would have to fully reimburse the taxpayer. The idea expounded by APPEA, that taxpayers should clean up the industry’s messes like this one is abhorrent. 

“Frankly, APPEA has brought this on itself and its members by not properly dealing with such a clear and entirely foreseeable problem earlier. Basic sensible regulation would have prevented this debacle, and without the unbound rent-seeking this was never going to happen until disaster struck. Indeed, APPEA itself provided submissions to the Government back in 2018 arguing against the precise regulatory measures needed to prevent just this situation. They even had the temerity to argue that an industry funded remediation fund would introduce ‘moral hazard’ by encouraging companies to dump and run from their existing obligations - but the status quo framework encourages just that except it’s the taxpayer bearing the cost. 

“It is critical that we sort this decommissioning out. The industry levy is only part of the fix with APPEA itself having presented estimates that the cost liability being carried in our offshore waters runs to some $60 billion over the next 30 years. Those have long been the known costs of doing fossil fuel business in our waters and to be raising this as a ‘public’ issue now is pretty galling. And for what it’s worth they aren’t just costs on a balance sheet but also real jobs and industry both on and offshore.

“APPEA can’t seem to be able to decide whether the oil and gas industry is a charity in desperate need of yet another government handout or the backbone of the economy with the nonsensical 'gas-fired recovery'.”

For further comment contact Tim Beshara on 0437 878786.