David Van (Victoria, Liberal Party) Share this | Hansard source

I rise to speak on 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. The Australian offshore oil and gas industry is subject to some of the world's most stringent and rigorous environmental regulation. The industry is committed to adhering to these regulations and to operating in an environmentally safe manner. As I have worked with many energy companies across my career, both upstream and downstream, I have seen firsthand how hard those companies work to ensure that the environment is protected throughout their operations. The industry currently applies some of the most extensive environmental management strategies to ensure its operations are conducted safely and responsibly. It is clear that the industry works to the highest standards and has a long history of world-class responsible environmental management.

It is important to recognise that Australia's offshore oil and gas industry has supported Australia's energy security and economic activity for over 50 years. Our economy has benefited from the export earnings, investment and employment opportunities that it has delivered for Australians. In my home state of Victoria, there are 23 offshore platforms and installations in the Bass Strait. This includes the new Marlon B platform and the Kipper subsea wells, which feed a network of around 600 kilometres of underwater pipelines.

These projects will provide Australians and Victorians with good jobs and economic support for Australia for decades to come, just as the creation of natural gas production and distribution in Victoria in the late 1960s along with cheap electricity from coal in those basins made the state a manufacturing powerhouse. With the moratoriums that have been in place in Victoria over recent years, the state is being brought to its knees on energy supply, and we need to correct that. But we need to do it with proper environmental regulation. If we are to properly support our resources sector, we must have the right regulatory framework in place. This will allow the sector to operate efficiently and to the safest standards possible. Having the right regulatory framework in place also ensures that best practice is followed through the entire life cycle of a project. As Australia's offshore petroleum industry continues to mature, there will be an increased focus on management of mid- to late-life assets. This includes managing declining production while preparing to decommission offshore facilities, wells and pipelines. This is sensible foresight by the government to deal with normal and expected changes occurring in the industry. There are particular points of the life cycle of any industry when regulatory frameworks and practices need to adapt to the changing circumstances. As the times change, the conditions in which we operate change, and we must change with those changing conditions. For the offshore oil and gas industry, that time is now and, as a government, we are responding accordingly. We must be prepared to deal with the future challenges that we will face as this industry begins to mature to ensure that the taxpayer, the shareholders, the workers and the natural environment are protected. These are all important considerations which these bills will address.

It is important that we strike the right balance between investment and managing an industry that is steadily maturing. This government wants to see that an industry that has benefited the nation so greatly is not left out in the cold with outdated regulations, and we don't want to see the taxpayer or the environment left holding the bag either. These bills will strengthen Australia's offshore oil and gas regulatory regime to ensure that emerging decommissioning works facing the industry are able to be managed effectively and the costs of decommissioning and offshore project remain with those who are responsible for carrying out the project. This regime will importantly ensure that the cost does not fall to the Australian taxpayer at the end of a project's life cycle. 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 and, if properly managed, the decommissioning of these projects will not provide the government, or most importantly the taxpayer, with any unforeseen burdens. Fundamentally, that is what these bills intend to do to manage our resources and related infrastructure effectively. Thankfully, we will see the development of new projects, such as the Scarborough, Browse and Barossa gas projects, which will continue to support our economy and energy security in the coming decades. However, those projects that are in the latter part of their life cycle need the correct regulatory framework in place to ensure that their decommissioning is handled correctly. As the industry continues to mature, large companies may move to divest their mature assets to focus on new areas of production potential. Australia can expect to see as new entrants to the industry smaller companies with joint ventures that bring a fresh perspective and a different risk profile.

This bill implements aspects of the government's enhanced offshore oil and gas decommissioning framework and the relevant recommendations from the independent review into the circumstances leading to the administration and liquidation of Northern Oil & Gas Australia. By amending the act to enhance regulatory oversight of activities the companies may undertake during the mid- to late-life of a project, including decommissioning, this bill reduces the risk of another Northern Oil & Gas Australia-like incident occurring again.

For those of you who are unaware of the Northern Oil & Gas Australia incident, in February 2020 this group went into liquidation, leaving the Northern Endeavour floating production storage and offtake facility without an operator. This was an unfortunate incident that left the government responsible for ensuring the safety of the facility and conducting critical maintenance work. How the government responded to this incident, and the implementation of these bills, sends a strong signal to the world that Australia will maintain its global reputation as a safe, reliable and responsible country for offshore oil and gas development.

These bills ensure that companies operating in Australia's offshore oil and gas regulatory regime are capable, competent and responsible in managing their offshore projects by ensuring that when projects are decommissioned they are managed effectively and that the associated costs of decommissioning, importantly, remain with the entity involved. We want to ensure that we have the best oversight framework and that the offshore oil and gas industry manages the current and future decommissioning challenges to ensure that our world-class offshore oil and gas industry remains exactly that: world-class.

The first bill, the Offshore Petroleum and Greenhouse Gas Storage Amendment (Titles Administration and Other Measures) Bill 2021, provides government oversight of transactions involving a change in the control of a petroleum or greenhouse gas titleholder. The sale of an offshore gas project is intended to be captured as a transfer of the title under the act. However, offshore projects can also be transferred by the sale of the shares in a company that owns and operates the project. These transactions are not currently captured by the act, because there is no transfer of interests in the petroleum title or titles. This is essential to ensure that mature assets are transferred in line with government regulation while maintaining an environment that encourages investment. If regulatory approval is not obtained for this type of corporate transaction, significant civil penalties may be imposed. In addition, the title can also be cancelled. This approach is consistent with similar regimes across the Commonwealth.

It is also important that regulations provide for trailing liability, and this is what this bill encompasses. Through the expansion of the remedial directions provisions in the act, any former titleholder can be called upon to carry out decommissioning if the current or immediate former titleholder is unable to do so. This, of course, is intended to be a measure of last resort where all other options have been exhausted. However, the Northern Oil & Gas Australia incident reinforced the fact that we as a government must be prepared for all scenarios. As the act stands now, only an immediate former titleholder can be directed to decommission and remediate an area. This reduces the environmental, health and safety risks associated with the potential abandonment of assets and infrastructure and ensures that risks and liabilities of petroleum activities remain the responsibility of those who have been involved in the development of the project and not the government or taxpayers. This will set the expectation that sellers will undertake appropriate due diligence before selling assets, titles and infrastructure.

In this bill, amendments are provided to improve the administration of petroleum and greenhouse gas titles. We want to ensure that, while best practice is being followed, assets can be transferred in the most effective manner possible. As I mentioned earlier, as the industry begins to mature, we expect to see new entrants to the industry who bring a different risk profile. By improving the administration of petroleum and greenhouse gas titles, we can ensure that the transfer of these assets is done without fault and in line with government regulation.

The Offshore Petroleum and Greenhouse Gas Storage (Regulatory Levies) Amendment Bill 2021 amends the Offshore Petroleum and Greenhouse Gas Storage (Regulatory Levies) Act 2003 to enable NOPSEMA, the National Offshore Petroleum Safety and Environmental Management Authority, to expand existing cost recovery mechanisms to former titleholders or related persons when issued a direction. Again, this will ensure that what occurred in the Northern Oil & Gas Australia incident will not occur again.

The government has been actively working with key stakeholders in the offshore oil and gas industry to seek advice on reforms to make sure the circumstances surrounding the Northern Endeavour do not happen again. We have a world-class offshore oil and gas industry, and we intend to keep it that way. Our oceans represent some of the most diverse and pristine ecosystems in the world, and this government is committed to ensuring that they are protected. These bills are one layer to the many components we're putting in place to achieve this. Recently, the National Plastic Plan was announced with the aim of reducing the amount of plastics that can impact our environment. In April this year, the Prime Minister announced an additional $100 million investment to ensure that we remain a world leader in marine park management.

Our oceans are the lifeblood of the Australian economy. They not only supply thousands of jobs around Australia but play a vital role in maintaining a healthy planet. It is our duty to ensure that those who rely on the ocean and interact with it, whether for enjoyment or for commercial reasons, do so in a responsible manner.

Our resources sector is absolutely vital to our economy and our energy security. Importantly, this government is committed to ensuring that this critical industry has proper regulations around it so it can continue to operate in an environmentally safe manner.