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Woodside hits out at rig clean-up levy as industry rift with government widens

Ms O’Neill said it was “very unfortunate” that NOGA entered bankruptcy, but such sales were commonplace in more mature petroleum markets such as the North Sea and Gulf of Mexico.

“The sale to NOGA was done with full expectation that that player will be able to generate enough revenue to cover the decommissioning obligations,” Ms O’Neill said. “Those obligations were very clearly communicated at the time of the sale.

“It’s a very common practice for the major players to sell assets as they approach end of life to companies that are smaller and can manage to extract additional value from those assets.”

Sources in the energy industry not authorised to speak to the media said rival producers were furious at Woodside’s sell-off of the Northern Endeavour and blamed it for the levy and potentially onerous financial regulations.

The petroleum industry has described Mr Pitt’s levy as “over the top and extreme”.

In June, Australian Petroleum Production and Exploration Association (APPEA) chief executive Andrew McConville said: “Any levy is unreasonable in any form, but one being so extreme will be a major disincentive for investment at a time when policy stability and certainty is critical.”

Mr Pitt is pursuing reforms to prevent a repeat of the Northern Endeavour situation.


A bill going through Parliament would create a “trailing liability” law to give government call-back powers to force previous owners of an asset to pay for decommissioning if the current owner cannot – as in the case of NOGA with Northern Endeavour.

It looms as a financial cliff for the offshore petroleum companies, with the government estimating the industry’s total clean-up bill at $52 billion.

APPEA is opposed to the call-back law, arguing it would “potentially encourage the final titleholder … to walk away from the property and reallocate decommissioning costs to former titleholders”.

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