Navigating the waters of decommissioning: legal obligations and the rising regulatory scrutiny on offshore petroleum assets

As the Australian oil and gas industry matures, a number of fields are reaching end of life. It has been estimated that around 5.7 million tonnes of decommissioning material will need to be removed from Australian waters over the next 30-40 years^[1] at a cost of around $60 billion^[2]. Accordingly, decommissioning liabilities are coming into sharper focus for both industry and regulators. 

Decommissioning forms part of the offshore petroleum lifecycle. Obligations to remove or appropriately deal with property arise for titleholders not just at final cessation of operations but throughout the operation phase as assets within an operating field reach the end of their useful life. 

Regulators are increasingly concerned that titleholders meet their obligations during the operations phase by proactively decommissioning throughout the life of the project and planning for decommissioning as early as possible. This is reflected in NOPSEMA’s information paper, “Panning for proactive decommissioning”^[3] and its ‘Decommissioning Compliance Strategy 2024-2029’. NOPSEMA sets out its expectations that titleholders engage in planning for decommissioning from the inception of a project and detail this planning in environment plans (EPs) submitted under the Offshore Petroleum and Greenhouse Gas Storage Act 2006 (Cth) (OPGGSA). 

Decommissioning obligations in Commonwealth waters 

There are obligations on titleholders under the OPGGSA to safely and effectively decommission property that is no longer in use. 

Section 270 – all property must be removed to surrender title

Under Section 270(3)c of the OPGGSA, it is a condition to surrendering title that the titleholder has, to the satisfaction of NOPSEMA, removed all property brought into the surrender area, or otherwise made arrangements for that property that are satisfactory to NOPSEMA. 

Section 572 – maintenance and removal of property

Section 572(2) of the OPGGSA requires titleholders to maintain in good condition and repair all property in the title area that is used in connection with the operations. 

Section 572(3) of the OPGGSA provides that a titleholder must remove all property from the title area that is not used, nor will be used, in connection with the operations.

Titleholders who contravene section 572(2) or (3) commit an offence of strict liability.

Commitments in permissioning documents

In addition to the general legislative obligations, titleholders may have specific decommissioning commitments that have been included in their existing permissioning documents. 

Timing for removal 

Section 270 requires decommissioning to be completed on a title before it is relinquished. However, the OPGGSA does not otherwise stipulate any timeframes for the completion of decommissioning obligations. 

The Australian Government and NOPSEMA have interpreted section 572 as requiring timely decommissioning.^[4] In the absence of any express timeframes in the legislation, NOPSEMA’s ‘Decommissioning Compliance Strategy’ 2024-2029 sets the following targets: 

• non-producing wells – to be suspended with downhole barriers within 12 months of loss of real-time monitoring and permanently abandoned within 10 years of suspension;
• floating infrastructure – to be removed within 12 months of cessation of production (COP);
• all wells – to be plugged and abandoned within three years of COP; and
• other property – to be decommissioned to approved end state within five years of COP.

While these are targets only, our experience indicates that NOPSEMA will apply them to its assessment of EPs and will need to be satisfied that departures from the targets are justified. 

Sometimes there can be greater economic benefit and less environmental impact when property is decommissioned as part of a larger campaign, even if this means delaying decommissioning of property that is no longer used until a more opportune time. When considering later decommissioning timeframes, NOPSEMA will want to see that property will continue to be monitored and maintained in the meantime. 

Permissioning documents and early planning

The OPGGSA and associated regulations do not provide a specific process for approval of decommissioning planning. It is a factor that is considered by NOPSEMA in its assessment and acceptance of all the permissioning documents for a project. 

NOPSEMA has stated that it expects to see the plan for decommissioning new property before that property has been brought onto the title area. NOPSEMA will consider whether a project will be designed and built to decommission in the Offshore Project Proposal. Over the life of the project, NOPSEMA will expect decommissioning to be addressed in all subsequent EPs for petroleum activities.^[5] 

NOPSEMA accepts that planning for decommissioning in the primitive stages of a project will have uncertainties and may be subject to change. The level of detail on decommissioning planning is expected to increase through the project life cycle and NOPSEMA expects to see detailed plans in place and the decommissioning program ready for execution by late life operations. 

There is no process provided under the legislation or regulations for NOPSEMA to provide its satisfaction for the purposes of section 270. However, the NOPSEMA policy ‘Section 270 Consent to surrender title - NOPSEMA advice’ confirms that the requirements of section 270 should be addressed in an EP for acceptance by NOPSEMA. 

Arrangements to permanently abandon a well must be addressed in the well operations management plan (WOMP). 

Full removal is the base case

NOPSEMA’s “base case” for all offshore operations is the full removal of all property unless and until NOPSEMA accepts an alternative arrangement. 

Section 572(7) allows titleholders to propose alternative arrangements in permissioning documents (generally an EP) that may be contrary to section 572(2) and (3). 

Alternative arrangements may be acceptable but NOPSEMA will generally require the titleholder to demonstrate that those alternative arrangements deliver equal or better environmental outcomes in comparison to complete removal. Even if approved by NOPSEMA, leaving property in situ is likely to also require a permit under the Environment Protection (Sea Dumping) Act 1981 (Sea Dumping Act). 

It tends to be very difficult to obtain approval to leave any plastics in situ.^[6]

Remedial directions and trailing liability

Part 6.4 of the OPGGSA empowers NOPSEMA and the Commonwealth Minister to direct titleholders, former titleholders and related entities to perform remedial works. The power is very broad and not limited to circumstances where the titleholder (or former titleholder) has breached regulatory requirements. This means that former titleholders or their related entities could potentially be called back to remove property that was previously approved by NOPSEMA and permitted under the Sea Dumping Act to remain in situ. 

The Government has stated that trailing liability is intended to be a last resort option and it would only be used in relation to previously decommissioned property approved to remain in situ if circumstances have change (for example a previously plugged and abandoned well starts leaking).^[7] However, this is not entrenched in the legislation and so the approach to the powers is subject to change with changing attitudes. The risk of future remedial directions is something that should be factored into a titleholder’s decision to seek to leave property in situ. 

Other regulators 

The vast majority of decommissioning liabilities are located offshore of Western Australia and will therefore fall within the jurisdiction of either NOPSEMA or the WA Department of Energy, Mines, Industry Regulation and Safety (DEMIRS).

The provisions relating to decommissioning under the Petroleum (Submerged Lands) Act 1982 (WA) (PSLA) are very similar to those under the OPGGSA^[8] and we are seeing a similar focus on decommission liabilities from DEMIRS. The updated DEMIRS policy^[9] and guideline^[10] on decommissioning released in 2024 includes a similar approach to that taken by NOPSEMA and pushes for earlier decommissioning planning and more decommissioning detail to be included in environment plans. However, at this stage DEMIRS has not given any formal guidance on target timeframes. 

Victoria is the other State that has significant property to be decommissioned in its coastal waters. The current legislation in Victoria is very similar to the Commonwealth OPGGSA.^[1] 

In the second half of 2024, the Victorian Government launched an inquiry into offshore petroleum infrastructure requiring decommissioning over the coming decades and the regulatory powers of the Victorian Government to ensure oil and gas producers meet their obligations. This inquiry may lead to legislative changes in Victoria. 

^{[1] CODA, A Baseline Assessment of Australia’s Offshore Oil and Gas Decommissioning Liability. 
[2] Wood Mackenzie, Australia Oil & Gas Industry Outlook Report, 2020. 
[3] ‘Planning for proactive decommissioning’, NOPSEMA Information Paper, 28 January 2025.
[4] ‘Guideline: Offshore petroleum decommissioning, In relation to the Offshore Petroleum and Greenhouse Gas Storage Act 2006’, Australian Government (Department of Industry, Science and Resources), 2 March 2022. 
[5] ‘Planning for proactive decommissioning’, NOPSEMA Information Paper, 28 January 2025. 
[6] Department of Energy, Mines, Industry Regulation and Safety Guideline: ‘Decommissioning of petroleum and geothermal energy property, equipment and infrastructure in Western Australian onshore areas and State coastal waters’. 
[7] Department of Industry, Science and Resources, ‘Trailing liability for decommissioning of offshore petroleum property: guidelines’, 7 March 2022.
[8] See sections 98, 104 and 107 of the PSLA. There are no powers to give remedial directions to related entities under the PSLA as per part 6.4 of the OPGGSA but former titleholders can still be called back. 
[9] DEMIRS Policy, Decommissioning of petroleum and geothermal energy property, equipment and infrastructure in Western Australian onshore areas and State coastal waters, March 2024. 
[10] DEMIRS Guideline, Decommissioning of petroleum and geothermal energy property, equipment and infrastructure in Western Australian onshore areas and State coastal waters, March 2024.
[11] See section 266(3)c, section 621 and Part 6.4 of the Offshore Petroleum and Greenhouse Gas Storage Act 2010 (Vic). There are no powers to give remedial directions to related entities under the Victorian legislation but former titleholders can still be called back.}