A Federal Court challenge raises critical questions about financial assurance for offshore decommissioning, with potentially far reaching implications for NOPSEMA approval processes and the Australian oil and gas sector.

The Federal Court of Australia has recently scrutinised the obligation to provide adequate financial assurance for offshore decommissioning activities.

In an application for judicial review, which is set to have industry-wide implications for the oil and gas sector, The Wilderness Society sought to quash a decision by the offshore regulator, National Offshore Petroleum Safety and Environmental Management Authority (NOPSEMA), to accept Santos’ Environment Plan (EP) for the Reindeer Wellhead Platform and Gas Supply Pipeline Operations and Cessation of Production activities (Decision),^[1] under regulation 33 of the Offshore Petroleum and Greenhouse Gas Storage (Environment) Regulations 2023 (OPGGSE Regulations).

The primary issue for determination by the Federal Court is whether NOPSEMA's Decision correctly considered the obligation of titleholders to maintain throughout the life of their title sufficient financial assurance to meet decommissioning costs and liabilities.^[2] Failure to do so would taint NOPSEMA's Decision with a jurisdictional error and dictate that the Decision be set aside.

The application was heard by Justice Abraham on 7 and 8 April 2026.  The Court reserved its decision.  The outcome will have significant ramifications on Australia's offshore oil and gas sector, and is now eagerly awaited by a range of stakeholders, including sector participants, the Regulator and the broader community alike.

Background

In making the Decision, NOPSEMA had to be reasonably satisfied that Santos' EP met each of the acceptance criteria set out in regulation 34 of the OPGGSE Regulations.^[3] The criteria includes that environmental risks and impacts have been appropriately identified and reduced to an acceptable level, that consultation requirements have been met, and the proposed activities comply with applicable legislation.^[4] Beyond the environmental and procedural criteria, NOPSEMA also had to consider and satisfy itself that Santos’ financial assurance arrangements were sufficient to meet the decommissioning costs. Section 571(2) of the OPGGS Act and regulation 16 of the OPGGSE Regulations, require a titleholder to have the capacity to meet costs, expenses and liabilities arising in connection with the petroleum activity. This includes liabilities arising from carrying out the petroleum activity, from the doing of any other thing for the purposes of the petroleum activity, and from complying (or failing to comply) with statutory requirements.^[5]

On 8 May 2025, NOPSEMA accepted the Reindeer EP^[6], concluding that it satisfied Santos’ financial assurance declaration and confirmation form, sufficient to demonstrate compliance with section 571(2) of the OPGGS Act.^[7]

The basis on which NOPSEMA assessed financial assurance soon became the focus of external scrutiny, and on 7 July 2025, a member of The Wilderness Society enquired of NOPSEMA whether it had undertaken an assessment of the adequacy (or otherwise) of the financial assurance arrangements to meet decommissioning costs. A NOPSEMA employee responded to the effect that the assessment did not evaluate the financial assurance provisions intended to meet the decommissioning liabilities.^[8]  The application for judicial review followed.

The judicial review challenge

On 1 August 2025, The Wilderness Society commenced judicial review proceedings in the Federal Court of Australia (NSW Registry) challenging NOPSEMA’s Decision to accept the EP.^[9] The Wilderness Society argued that NOPSEMA misconstrued s. 571(2) of the OPGGS Act by interpreting it as not requiring financial assurance for decommissioning costs. On that basis, it contended that NOPSEMA could not have been reasonably satisfied that the titleholder had complied with s. 571(2) of the OPGGSA, as required by regulation 16 of the OPGGSE Regulations.^[10]

At the heart of the proceeding was the relationship between ss. 571 and 572 of the OPGGS Act. While s. 571(2) addresses a titleholder’s capacity to meet costs and liabilities associated with a petroleum activity, s 572 makes clear that decommissioning is the responsibility of titleholders and that that offshore infrastructure is expected to be removed at the end of a project’s life. The Court was asked to determine whether, and to what extent, s. 571(2) requires proponents of Environmental Plans to demonstrate financial capacity to meet decommissioning costs throughout the life of a project.

We will continue to monitor the application and will provide an update when the Court’s decision is available, including observations as to the implications for offshore petroleum operations in Australia.

Interim key takeaways

• The judicial review may reshape how financial assurance is assessed as part of Environment Plan approval processes, particularly in relation to decommissioning liabilities.^[11]
• The Court’s decision could have broader implications for offshore project risk allocation and long‑term liability planning for proponents.^[12]
• With industry‑wide decommissioning costs estimated to exceed $60 billion over coming decades, the outcome is being closely watched by regulators and industry participants.^[13]

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^{[1] NOPSEMA, "Acceptance of Reindeer Wellhead Platform and Gas Supply Pipeline Operations and Cessation of Production Environment Plan", Statement of Reason, (4 July 2025), p 2.}

^{[2] Offshore Petroleum and Greenhouse Gas Storage Act 2006 (Cth) s 571(2).}

^{[3] Under regulation 33 of the OPGGSE Regulations.}

^{[4] NOPSEMA, "Acceptance of Reindeer Wellhead Platform and Gas Supply Pipeline Operations and Cessation of Production Environment Plan", Statement of Reason, (4 July 2025), p 1-2.} 

^{[5] The Wilderness Society Ltd v National Offshore Petroleum Safety and Environmental Management Authority & Anor, Amended Originating Application for Judicial Review and for Relief Under s 39B Judiciary Act 1903.}

^{[6] Pursuant to Administrative Decisions (Judicial Review) Act 1977 (Cth). See The Wilderness Society Ltd v National Offshore Petroleum Safety and Environmental Management Authority & Anor, Amended Originating Application for Judicial Review and for Relief Under s 39B Judiciary Act 1903.}

^{[7] The Wilderness Society Ltd v National Offshore Petroleum Safety and Environmental Management Authority & Anor, Amended Originating Application for Judicial Review and for Relief Under s 39B Judiciary Act 1903.}

^{[8] Wilderness Society, Media Release (7 April 2026), accessed at: Wilderness Society | Court showdown to decide if oil and gas company….}

^{[9] Wilderness Society Media Release (7 April 2026), accessed at: Wilderness Society | Court showdown to decide if oil and gas company….}

^{[10] Wilderness Society, Media Release (7 April 2026), accessed at: Wilderness Society | Court showdown to decide if oil and gas company….}