Woodside, Oil Majors, Work to Overturn $723M Timor Sea Field Decommissioning Levy

August 27, 2021

Northern Endeavour - Credit: Australian Government
Northern Endeavour - Credit: Australian Government

Woodside Petroleum said on Friday it is working with other companies on a plan to replace a proposed Australian government levy that would make offshore producers pay for the clean up of an abandoned oilfield in the Timor Sea.

The government stunned the industry in May when it said it would impose a levy from July 1 on all offshore oil and gas producers to cover the cost - estimated to be as high as A$1 billion ($723 million) - of removing facilities and cleaning up the area around the abandoned Laminaria-Corallina fields.

Global majors, led by Chevron Corp, Exxon Mobil Corp, and Royal Dutch Shell, voiced opposition to paying to rehabilitate a site they have had nothing to do with and have lobbied the government to drop the levy.

Chevron and Shell deferred comment to Woodside on Friday. Exxon did not comment.

"Woodside is working with industry partners to present to the government an alternative proposal for the decommissioning of the Northern Endeavour," a Woodside spokesperson told Reuters on Friday, in the company's first public comment on the plan.

The Northern Endeavour is the giant floating production storage and offloading (FPSO) vessel at the Laminaria-Corallina oilfields in the Timor Sea that were abandoned when the fields' owner, Northern Oil & Gas Australia (NOGA), collapsed in 2019.

Woodside, which also opposed the levy, came under pressure to take some responsibility for the decommissioning as NOGA bought a stake in the field from Woodside.



Woodside did not comment on whether the alternative plan would involve it handling the decommissioning of the Northern Endeavour, financed by an industry fund.

The industry's lobby group, the Australian Petroleum Production and Exploration Association (APPEA), said it had called on the government to explore ways to cut the costs of its current management of the decommissioning project and consider alternative cost recovery measures.

"APPEA has long opposed a levy on a number of offshore oil and gas companies for a project they have never been involved in, never benefitted from and up to 3,500 kilometers away from their operations as it is extreme and unreasonable," APPEA Chief Executive Andrew McConville said in emailed comments.

The oil industry has been buoyed this year by a strong recovery in the oil price following a crash last year triggered by the impact of the pandemic on fuel demand.

However, it is still facing pressure from investors and environmental campaigners demanding a shift away from fossil fuel energy, which could hasten the closure of some oil and gas fields and bring on decommissioning costs sooner.

The Treasury Department did not comment on any alternative proposal, and said it has announced a temporary levy "to ensure taxpayers are not left to pay for the decommissioning".

The government plans to consult on draft legislation before the end of the year, a Treasury spokesperson said. 

(Reporting by Sonali Paul; Editing by Tom Hogue, Gerry Doyle and Barbara Lewis)



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