Decommissioning: taking control of your committed investment
Robin PolsonDeloitte Financial Advisory Pty Ltd, Riverside Centre, 123 Eagle Street, Brisbane, Qld. 4000, Australia. Email: rpolson@deloitte.com.au
The APPEA Journal 58(2) 739-742 https://doi.org/10.1071/AJ17126
Accepted: 22 February 2018 Published: 28 May 2018
Abstract
At the APPEA 2017 Conference in Perth, Bernadette Cullinane and Susan Gourvenec drew our attention to the looming challenge for Australia’s oil and gas industry in decommissioning its aging assets (Cullinane and Gourvenec 2017). While Cullinane and Gourvenec’s paper focussed on the experience challenge for the Australian industry, this paper will drill down to explore the funding and financial challenges and opportunities for decommissioning in the decades ahead.
In approaching the decommissioning of their assets, oil and gas companies must consider a broad range of stakeholders, beyond their immediate shareholders and board members. As we have seen in the development of new projects, Australian Government, environmental organisations and community groups, all have increasingly significant impact. These stakeholders have been considered and managed with (at best) varying degrees of effectiveness in the recent past. This impact will continue to grow for decommissioning of existing assets.
However, right now, with few decommissioning projects in play, the industry has a limited window of opportunity to set the agenda for how, when and under what kind of funding arrangements and financial structures decommissioning can take place. By getting ahead of the game and establishing best practices from the outset, the industry can demonstrate to Australian Government, environmental organisations and community groups a level of commitment and accountability that will allow us to move ahead on decommissioning, with reduced outside interference.
The window of opportunity is closing. The time to act is now.
Keywords: abandonment, financial assurance, industry competitiveness, oil and gas, taxation.
Robin Polson is an energy and resources industry specialist focussing on strategic value advice and decision analysis. Throughout his 30-year career he has been engaged as a trusted financial advisor to the energy & resources industry and since 2001 he has developed a deep focus on the Australia East Coast coal seam gas and LNG industry. |
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