Monitoring financial assurance compliance
Article published in the Regulator | Issue 2: 2016
Monitoring financial assurance compliance NOPSEMA monitors titleholder compliance with the regulatory requirements for financial assurance through its assessment and inspection activities.
Since 1 January 2015, NOPSEMA has implemented a range of financial assurance compliance activities beginning with ensuring that no environment plan is accepted until NOPSEMA is reasonably satisfied that the titleholder is compliant with their financial assurance obligations. In June 2016, NOPSEMA published updates to its Financial assurance for petroleum titles guideline (GL1381) to assist titleholders in demonstrating their compliance with financial assurance obligations under the OPGGS Act.
The Australian Petroleum Producers Association (APPEA) developed a method to calculate financial assurance required for particular petroleum activities. NOPSEMA recognises circumstances may arise where a titleholder will propose a petroleum activity that falls outside the scope of the APPEA method. NOPSEMA’s guideline clarifies that, whilst a titleholder may choose to adopt another method to determine the level of financial assurance required, it will usually require independent validation and endorsement by NOPSEMA. To ensure the approval process is not unnecessarily delayed, NOPSEMA encourages titleholders to engage with the regulator early to allow sufficient time to complete the validation process for what could be more complex assurance arrangements.
NOPSEMA’s updated financial assurance guideline and Petroleum environment inspection policy (PL0973) explain how titleholders can comply with their duty under the OPGGS Act without having had an environment plan accepted under the amended Environment Regulations. The inspection policy also clarifies how NOPSEMA monitors titleholder compliance with financial assurance requirements through petroleum environmental inspections. NOPSEMA continues to focus the inspection program on petroleum activities with the greatest oil spill consequence where it is imperative that appropriate financial assurance is in place. NOPSEMA inspectors will continue to inspect compliance with financial assurance requirements including checking that titleholders continue to implement processes to maintain financial assurance throughout the life of the activity. Graduated enforcement will usually commence with inspection report findings and recommendations where titleholder(s) cannot demonstrate compliance. Where more serious breaches of failing to maintain sufficient financial assurance are detected, NOPSEMA may escalate compliance to ensure the titleholder complies with their duty.
For advice on how to demonstrate financial assurance compliance, titleholders are advised to read the updated guideline and policy. For more information see the Financial assurance page at nopsema.gov.au.