Australia Opens Consultation on Decommissioning Planning and Finance
November 19, 2025
The Australian Government has published a consultation paper seeking feedback on reforms to Decommissioning and Financial assurance arrangements for the offshore oil and gas industry.
Australia has up to A$60 billion of offshore oil and gas decommissioning activities expected to occur over the next 30 to 50 years.
While the paper focuses mainly on oil and gas projects, it is also seeking input on the regulatory regime for decommissioning carbon capture and storage projects.
Experience in Australia and internationally has shown that decommissioning safely and cost effectively becomes increasingly challenging the longer the period between ending production and completing decommissioning. Decommissioning is a cost mainly paid out at the end of a project’s life, when revenue from the project is either lower or has stopped. Postponing decommissioning can be financially appealing, as it allows titleholders to delay decommissioning outlays, maximize short-term financial returns, and skew financial viability to increase investor interest.
Additionally, there are many examples of titleholders underestimating the cost or complexity of their decommissioning obligations.
A government report released earlier this week, produced by Xodus Group, estimates industry will spend $43.6 billion to 2070. This rises to $66.8 billion when factoring in inflation. Around 55% of the decommissioning will occur before 2040. The report found that 61% of the liability is off Western Australia, 23% is off Victoria and 16% is off the Northern Territory.
The proposed reforms aim to strengthen the decommissioning framework so industry decommissions in a timely, safe and environmentally responsible way and remains responsible for the risks and liabilities of offshore activities.
The proposed reforms cover areas including decommissioning planning, financial planning and assurance, decommissioning and financial capacity risk assessments, compliance and enforcement tools and title surrender.
The paper states: “Government needs to have clear and early visibility of titleholder planning and provisioning for decommissioning. This is to ensure that instances where the government needs to direct current or former titleholders to undertake decommissioning, or in the worst-case scenario step in, are limited and a last resort.
“The risk of a further levy for decommissioning costs from an insolvent titleholder could dampen future investment in the sector. A more effective regulatory framework will reduce the risks that such interventions will be necessary in the future.”
Feedback to the consultation paper will close on January 13, 2026.
