Background

On 25 May 2011 a package of bills was introduced into the Federal Parliament which will amend the existing regulatory regime applicable for offshore Commonwealth waters, and which are intended to represent the first steps in the transition to a single national regulator for the petroleum and greenhouse gas storage industry.

These proposed amendments are issued in response to the Montara incident report which recommended the establishment of a single national regulator for the industry. According to Minister for Resources and Energy, Martin Ferguson, who introduced the package, the amendments will reduce the regulatory burden on the industry while strengthening safety practices and compliance.

The key changes are:

  • expansion of National Offshore Petroleum Safety Authority’s (NOPSA) role and renaming of NOPSA to the National Offshore Petroleum Safety and Environmental Management Authority (NOPSEMA)
  • establishment of the National Offshore Petroleum Titles Administrator (NOPTA)
  • imposition of an annual titles administration levy, and
  • imposition of an environment plan levy.

Transition to a single national regulator

At this stage, the changes to be implemented by the proposed bills will apply only to offshore petroleum and greenhouse gas operations in Commonwealth waters. Operations in the coastal waters of a state or territory will continue to be regulated separately under the relevant state or territory regime, however it will be possible for any state or territory to confer functions and powers on NOPSEMA and NOPTA and operate within the new federal regime instead of state legislation.

Following the release of the Review of the Regulatory Burden on the Upstream Petroleum (Oil & Gas) Sector by the Productivity Commission on 30 April 2009, the multi-government Ministerial Council on Mineral and Petroleum Resources (MCMPR) began negotiating a joint response to the recommendations contained in the report, which included a recommendation that a single national regulator be established. The most recent discussions of the MCMPR on this issue took place on 18 February 2011, however consensus was not reached. Martin Ferguson at this point informed the MCMPR that the Federal Government would nonetheless move forward with implementation of the proposed reforms in Commonwealth waters.

Establishment of NOPSEMA and NOPTA

NOPSEMA will be an expanded version of NOPSA. In addition to the functions currently carried out by NOPSA, NOPSEMA will also be responsible for administering legislative provisions relating to environmental management of offshore petroleum and greenhouse gas storage operations.

The principal functions of NOPTA will include:

  • assisting the Joint Authorities, comprised of the Commonwealth Minister and each of the state and territory Ministers responsible for regulation of the offshore petroleum and greenhouse gas storage industry, which will remain responsible for major decisions regarding granting and cancellation of petroleum titles and resource management and security
  • collection, management and release of data
  • titles administration
  • approval and registration of transfers and dealings, and
  • establishing and maintaining registers of petroleum and greenhouse gas storage titles.

Levies

The annual titles administration levy will be payable by the registered holder of a petroleum or greenhouse gas storage title in Commonwealth waters, each year in which the title is in force.

The environment plan levy will apply to the registered holder of a petroleum or greenhouse gas storage title in Commonwealth waters, whenever an application for acceptance or revision of an environment plan is submitted in relation to the title in accordance with the Offshore Petroleum and Greenhouse Gas Storage (Environment) Regulations 2009 (Cth).

These levies are intended to recover the operating costs of NOPSEMA and NOPTA.

Timing of implementation

Two of the bills implementing the amendments to federal regulation of the offshore petroleum and greenhouse gas storage industry, the Offshore Petroleum and Greenhouse Gas Storage Regulatory Levies Legislation Amendment (2011 Measures No.1) Bill 2011 and the Offshore Petroleum and Greenhouse Gas Storage Regulatory Levies (Consequential Amendments) Bill 2011, received Royal Assent on 25 May 2011. These bills contain the amendments necessary for the imposition of the new levies, however they will not commence until the remainder of the bills package is passed by the Federal Parliament and comes into effect. This is expected to occur during the spring sitting, between August and November 2011.