Financial assurance (for marine oil spill pollution)
Under section 571(2) of the Offshore Petroleum and Greenhouse Gas Storage Act 2006, titleholders are required to have sufficient financial assurance to meet the costs, expenses and liabilities that may arise in connection with carrying out petroleum activities, including those associated with responding to a major oil spill, as a prior condition of acceptance of an environment plan. This requirement applies to new and revised environment plans.
NOPSEMA conducts environmental inspections to monitor titleholder compliance with the financial assurance requirements. The inspections focus on confirming titleholders are maintaining sufficient financial assurance throughout the life of the activity for marine oil pollution in accordance with the legislative requirements and the advice provided in Financial assurance for petroleum titles guideline.
To submit a financial assurance declaration or confirmation see the Make a Regulatory Submission page.
A titleholder is required to:
- Follow NOPSEMA's guidance including the Financial assurance requirements for petroleum titles policy and the Financial assurance for petroleum titles guideline
- submit a financial assurance declaration (FM1519) for the title
- submit a financial assurance confirmation (FM1465) for the specific environment plan.
Titleholders may choose an appropriate cost-calculation method for estimating levels of financial assurance, however, as per GL1381, this will require independent validation prior to consideration by NOPSEMA. NOPSEMA strongly encourages titleholders to engage with NOPSEMA early to allow timely validation of the method.
Financial assurance estimation methods
The Australian Energy Producers (AEP) have developed two methods for estimating levels of financial assurance:
- 2024 FA Method - Australian Energy Producers 2024 - Method for Estimating Levels of Financial Assurance: Part 1 - General 2024 FA Method (the ‘General 2024 FA Method’)
- 2024 FA Method - Australian Energy Producers 2024 - Method for Estimating Levels of Financial Assurance: Part 2 - VBA 2024 FA Method (the ‘VBA 2024 FA Method’)
These methods present a standard for estimating the level of financial assurance required that is intended to be applicable to most petroleum activities undertaken in Australian waters. Part 1 of the method can be used for all petroleum activities, within the stated limits. Part 2 of the method is restricted to marine diesel/ gas oil incidents during vessel based activities. Titleholders can access further information from AEP.
On 11 October 2024, following independent validation of the methodology. NOPSEMA has confirmed it considers the AEP ‘General 2024 FA Method’ and ‘VBA 2024 FA Method’ (when used in conjunction with NOPSEMA's process for making financial assurance declarations and confirmations) to be a suitable form for demonstrating financial assurance as a prior condition to acceptance of an environment plan.
Transitional arrangements
NOPSEMA expects all titleholders using the previously endorsed 2018 APPEA Method to review their ongoing financial assurance arrangements utilising the 2024 General Method and/or the 2024 VBA Method as appropriate. NOPSEMA recognises that this will take some time and has clarified transitional arrangements for titleholders utilising the AEP methods here: Transitional arrangements for the AEP ‘General 2024 FA Method’ and ‘VBA 2024 FA Method’. To obtain the method or for more information regarding the review please contact AEP.
Related documents
| Title | Type | Size | Date |
|---|---|---|---|
| Financial assurance for petroleum titles guideline | 222.9 KB | 17/10/2024 | |
| Financial assurance confirmation form | 1.01 MB | 17/10/2024 | |
| Transitional arrangements for 2024 AEP Methods | 114.55 KB | 16/10/2024 | |
| Financial assurance declaration form | 1.42 MB | 10/01/2024 | |
| Financial assurance requirements for petroleum titles policy | 205.88 KB | 10/01/2024 |