The clock is ticking for a failing Australian floating oil platform in the Timor Sea, with the company that owns it facing possible bankruptcy in coming weeks.
If it goes broke, Australians will be lumped with the $1 billion clean-up cost.
The Venture floating production storage and offloading (FPSO) vessel in the infamous Montana oil field stopped production on the 29th of July due to a flaw in a holding tank.
It’s owner, the Singapore-based Jadestone company, recently admitted it only has a net cash position of $7.1m and $35m in standby working capital — far less than what is required to retire the FPSO.
Last week the company said it had to return production at Montara within 60-days of the shutdown or else it would breach the terms of bank loans.
That means that if they can’t fix the problem in the next few weeks, banks have promised to shut the whole venture down and Jadestone will run out of funds. leaving Australia with a clean up bill likely to cost around $1 billion.
It’s happened before, when the decommissioning of the former Woodside FPSO, the “Northern Endeavour,” was dumped on Australian taxpayers.
The government is in the process of decommissioning the Northern Endeavour, with the bill approaching $1 billion.
At the time, the Morrison Coalition government was so angered by the situation, it placed a small temporary per-barrel levy on the entire industry so as to pay for the Northern Endeavour’s decommissioning.
Friends of the Earth Offshore Fossil Gas Campaigner, Jeff Waters, said the temporary levy needs to be extended indefinitely, and increased, to pay for worlds-best-practice decommissioning and recycling.
“It appears a Jadestone collapse is likely to cost Australia a large fortune,” Jeff Waters said.
“It’s looking like another ‘Northern Endeavour’ is about to happen in the Timor Sea.
“And in decommissioning the Northern Endeavour, Australian authorities are not following world’s best practice.”
“Instead of safely containing pollutants like radioactive and hydrocarbon waste, Australia is planning to wash it all into the sea, and we then plan to tow the entire ship to an undisclosed Asian breaking yard, rather than either taking it to Europe (where scrapping is done with high environmental standards) or keeping it floating until proper recycling yards can be built here,” he said.
“The federal government needs to extend and increase the temporary decommissioning levy so as to pay for world’s best practice recycling yards and a ship to undertake the decommissioning work.”
The decommissioning of offshore oil and gas assets in Australia has been estimated to cost upwards of $60 billion in total.
“There is new trailing liability legislation in place that is supposed to make sure companies and individuals pay for decommissioning, but that’s not going to help with a company like Jadestone, where the owners are overseas,” Jeff Waters said.
Key Facts:
– Jadestone FPSO broken down
– Banks threatening to withdraw operating funds
– Taxpayers would be hit with a $1b clean up bill.
