Australia: Australian offshore petroleum industry – What's new in 2014

Energy, Infrastructure and Resources Alert
Last Updated: 24 January 2014
Article by Clive Cachia, Eric Fethers and Jo Garland

Summary of What's New in 2014

The year 2014 brings a number of regulatory changes for Australia's offshore petroleum industry that will affect domestic and international investors, operators and owners. Key changes include:

  • proposal for a 'one stop shop' for environmental approvals - expected to be approved by the Minister at the end of February 2014
  • amendments to improve and clarify environmental management – expected to be finalised by February 2014
  • revised cash-bidding system – effective from 14 December 2013
  • release of an Issues Paper to inform development of an Energy White Paper – submissions due 7 February 2014
  • revised National Plan for Maritime Environment Emergencies - due to come into force mid 2014
  • changes in registration fees and levies – effective from 1 November 2013 and 1 January 2014 respectively.

Streamlining of Environmental Approvals

A proposal to create a one stop shop for offshore petroleum environmental assessments (Streamlining Proposal) is expected to be approved by the Minister for the Environment at the end of February 2014. Currently, environmental assessment of offshore petroleum activities occurs at both a State and Commonwealth level. Under the Streamlining Proposal NOPSEMA would be the sole environmental regulator of offshore petroleum activities.

The Streamlining Proposal is in response to several independent reviews (including the Productivity Commission's Report on Mineral and Energy Resource Exploration dated September 2013) recommending streamlining of the State and Commonwealth regulatory requirements. Consultation on the key documents closed on 20 December 2013. A supplementary report and, if necessary, a revised program taking into account the comments received will soon be provided to the Minister for the Environment for approval.

Amendments to Environment Regulations

Proposed amendments to the Offshore Petroleum and Greenhouse Gas Storage (Environment) Regulations 2009 (Environment Regulations), additional to those under the Streamlining Proposal, are expected to be finalised by February 2014. The amendments seek to improve and clarify the regulation of environmental management of offshore petroleum and greenhouse gas storage activities.

The following are proposed key amendments to the Environment Regulations.

  • Shifting the responsibility for compliance with the Environment Regulations from the operator to the titleholder. While the Offshore Petroleum and Greenhouse Gas Storage Act 2006 (OPGGSA) places responsibility on the titleholder to control, clean up and remediate any damage to the environment, the operator (not the titleholder) is responsible for compliance with the Environment Regulations. This disjoint has been flagged as a major design weakness in the Environment Regulations as the operator may not have the level of resources or control necessary to comply with the Environment Regulations. Accordingly, shifting responsibility to the titleholder has been proposed.
  • Requiring the Regulator to publish proposed activities on receipt of an environment plan by the titleholder.
  • Clarifying the definition of 'petroleum activity' so that ordinary maritime activities (such as pipeline route surveys) are not captured within the definition and therefore not subject to an environment plan.
  • Giving the Regulator power to request further information when assessing environment plans.
  • Clarifying what is a 'recordable incident'.

Consultation on the amendments closed on 20 December 2013 and submissions will be taken into account when finalising the amendments in February 2014.

Amendments to Cash Bidding Model

The cash bidding model under the OPGGSA was amended with effect from 14 December 2013.

The following are a number of key changes that have been implemented to the cash bidding model.

  • Limiting the discretion of the highest bidder to refuse an offer of a permit. A 10% deposit is payable upon placement of a cash bid and is forfeited if the offer is refused or full payment of the cash bid amount is not made by the due date.
  • Allowing a reserve price to be set for each of the areas being released. The reserve price may or may not be disclosed in advance of bid applications.
  • Allowing a pre-qualification assessment of potential bidders prior to cash bids being placed.
  • Were the two highest cash bids are equal, further cash bids are invited with the highest further bid being offered the permit (or where both further bids are also tied, the first bid received will be offered the permit).

Consultation on Energy White Paper

The Department of Industry (DoI) has released an 'Energy White Paper - Issues Paper: to inform preparation of a White Paper (December 2013)' (Issues Paper) for public comment.

The Issues Paper is the beginning of consultation on the Energy White Paper that will be developed by DoI. The Issues Paper outlines the scope of the Energy White Paper, maps links to other related policy and regulatory developments, and seeks comment on issues to be considered in a Green Paper that will outline possible policy approaches.

Comments on the Issues Paper should be sent to the DoI by 7 February 2014.

The resulting Green Paper is expected to be released for consultation in May 2014, with the final Energy White Paper expected to be completed in September 2014.

More information on the Issues Paper can be found in our Legal Insight ' New Energy White Paper Process Commences'.

Revised National Plan for Maritime Environmental Emergencies

A revised National Plan for Maritime Environmental Emergencies is due to come into force mid 2014. The revised National Plan results from a significant review and lessons learned from major Australian and international incidents.

Cessation of Registration Fees under OPGGSA

Registration fees under the OPGGSA were abolished effective from 1 November 2013.

Fees have now been replaced with application fees reflecting the costs incurred in undertaking NOPTA's relevant work. Importantly, there is now a flat application fee for the approval of a transfer or dealing (rather than a fee based on the value of the permit).

Increased Safety Case and Environment Plan Levies

On 1 January 2014 the safety case levies rose by 13% and the environment plan levies rose by 20%.

The increase was affected by the Offshore Petroleum and Greenhouse Gas Storage (Regulatory Levies) Amendment (Safety Case and Environment Plan Levies) Regulation 2013 No. 273 (Cth) which amended the Offshore Petroleum and Greenhouse Gas Storage (Regulatory Levies) Regulations (2004) 2004 No. 315 (Cth).

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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