Liability figure points to significant opportunities for the decommissioning industry
New research from global energy consultancy Xodus has revealed that the estimated cost of fully removing Australia’s offshore oil and gas infrastructure is benefiting from rising efficiency and understanding in the country’s decommissioning sector.
Australian Offshore Oil & Gas Decommissioning Liability Estimate 2025 was commissioned by the Australian Government’s Department of Industry, Science and Resources, and finds that by 2070, full removal of infrastructure in Australian Commonwealth waters is expected to cost $43.6 billion AUD, ($66.8 billion AUD when adjusted for inflation), compared with a previous 2020 estimate of $61.8 billion AUD.
The reduction reflects improved assumptions and greater accuracy in forecasting, particularly around well plugging, pipeline removal and vessel mobilisation. The estimate covers more than 700 wells, 7,600 kilometres of pipelines and 520 subsea structures.
Andrew Taylor, Head of Advisory APAC at Xodus, said: 'Accurate cost forecasting is critical as Australia develops a safer and more sustainable decommissioning sector. This research gives both industry and government the tools to plan, budget and execute decommissioning more efficiently. The revised estimate not only reflects a maturing approach but provides a baseline for smarter, more collaborative strategies going forward.'
Future cost savings will likely come from better coordination, improved technologies and the development of local infrastructure. The report also explores the cost-saving potential of aligning decommissioning campaigns with offshore wind construction activity.
The methodology assumes full removal as the default scenario and draws on Class 5 AACE estimates to account for uncertainty. Costs were calibrated regionally and reflect input from decommissioning managers across Australia’s major operators.
Based on current projections, Xodus expects significant investment in vessels, ports and recycling infrastructure will be needed to meet demand through to 2070, underscoring a key opportunity for private sector innovation and public sector planning.
With over 18 years of global decommissioning experience, Xodus has supported more than 70 projects worldwide, advising governments and operators alike on sustainable asset retirement strategies.
As global focus on lifecycle accountability intensifies, the firm continues to lead with data-driven, pragmatic insight across oil and gas, decommissioning, CCUS, offshore wind and hydrogen.
Download the full report here: https://www.industry.gov.au/publications/australian-offshore-oil-and-gas-decommissioning-liability-estimate-2025
Source: Xodus
