Wednesday, 26 May 2021
Offshore Petroleum and Greenhouse Gas Storage Amendment (Titles Administration and Other Measures) Bill 2021; Second Reading
That this bill be now read a second time.
The Offshore Petroleum and Greenhouse Gas Storage Amendment (Titles Administration and Other Measures) Bill 2021 amends the Offshore Petroleum and Greenhouse Gas Storage Act 2006.
Australia's offshore oil and gas industry has supported Australia's energy security and economy for over 50 years. It has delivered enormous benefits in the form of export earnings, employment and investment.
There are particular points in the life cycle of an industry when regulatory frameworks and practices need to adapt to changing circumstances.
For Australia, that time is now. We need to be positioned to respond to future decommissioning challenges with effective regulatory oversight and robust safety nets to strengthen protections for the taxpayer, workers and the environment.
In the coming decades, there will be a number of offshore projects which have exhausted their reserves and require decommissioning. This is a normal part of the resource development life cycle.
During this time, new projects will continue to be developed such as the Scarborough, Browse and Barossa gas projects and the Dorado oil project.
As the industry continues to mature, large companies may move to divest their mature assets to focus on areas of new production potential. Australia can expect to see new entrants to the industry who bring a fresh perspective and a different risk profile.
The recent liquidation of a company operating an oil-producing asset in Australian waters demonstrates the importance of the regime being able to recognise and adapt to different risk profiles of the offshore industry.
This bill ensures that companies operating in Australia's offshore oil and gas regulatory regime are capable, competent and responsible in managing their offshore projects. It ensures decommissioning remains the responsibility of the businesses involved in the oil and gas development, protecting the Australian taxpayer and the environment.
This bill makes necessary changes to implement aspects of the Australian government's enhanced offshore and gas decommissioning framework.
The bill also gives effect to the relevant recommendations of the independent review into the circumstances leading to the liquidation of Northern Oil and Gas Australia, known as the Walker review.
This bill confirms this government's commitment to have the world's most advanced, innovative and successful offshore oil and gas sector, which delivers sustained prosperity and social development for all Australians.
The bill amends the act to ensure government oversight and scrutiny of transactions involving a change of control of a petroleum or greenhouse gas titleholder through a merger or takeover.
While this type of transaction is not currently captured by the act, it may result in a new entity ultimately obtaining control of the titleholder and may impact the titleholder's ability to finance and meet and meet its obligations.
Failure to obtain regulatory approval for this type of corporate transaction could now result in a significant civil penalty. This approach is consistent with similar regimes across the Commonwealth and will be a deterrent for corporate misconduct.
Contravening the requirement to obtain approval is also grounds for cancellation of the title.
With an estimated $60 billion in anticipated decommissioning liabilities falling due over the next 30 years, the government needs to ensure it can call upon former titleholders to decommission and remediate the area in the unlikely event that the current titleholder is unable to do so.
The bill expands current directions powers to enable any former titleholder or 'related person' to carry out decommissioning activities—known as trailing liability.
As the act stands now, only an immediate former titleholder can be directed to decommission and remediate an area.
Although this is an action of last resort, which should only be used when all other safeguards have been exhausted, it reduces risk.
It reduces the environmental, health and safety risks associated with the potential abandonment of assets and infrastructure. It reduces the associated risk that the financial obligations of decommissioning will be left to Australian taxpayers.
It also sets the expectation that sellers will undertake appropriate due diligence before selling assets, titles and infrastructure, so they can avoid being called back to decommission and remediate title areas.
Trailing liability is a feature of comparable mature offshore oil and gas regimes which are considered leading-practice jurisdictions.
The bill also increases the regulatory scrutiny of entities at key decision points and expands the types of information that can be requested by the decision-maker.
This ensures the government is better equipped to 'screen' applicants, reducing the risk that an entity that does not meet the financial and technical capability requirements will undertake petroleum or greenhouse gas activities in Australian waters including decommissioning.
It also provides for amendments to improve the administration of petroleum and greenhouse gas titles, including enabling electronic lodgement of applications and documents.
This bill demonstrates this government's ongoing commitment to having a globally recognised oil and gas sector, which continues to deliver significant employment and economic activity.
It ensures we strike the right balance between investment and managing a maturing industry.
It delivers a strong and effective regulatory framework for offshore petroleum and greenhouse gas activities.
I commend the bill to the chamber.