UPS given contract for Northern Endeavour at taxpayer expense

PERTH-based GR Engineering told the market this morning its subsidiary Upstream Production Solutions had been awarded a longer-term contract from the federal government to watch over the Northern Endeavour FPSO offshore Western Australia.
UPS given contract for Northern Endeavour at taxpayer expense  UPS given contract for Northern Endeavour at taxpayer expense  UPS given contract for Northern Endeavour at taxpayer expense  UPS given contract for Northern Endeavour at taxpayer expense  UPS given contract for Northern Endeavour at taxpayer expense

Paul Hunt

Senior Journalist: Oil & Gas, Policy.

Paul Hunt

The Northern Endeavour lies inert in the Commonwealth waters of the Timor Sea. The vessel is now in ‘lighthouse' mode and not producing from the Laminaria-Corallina oilfields after its owner Northern Oil and Gas Australia (NOGA) ran out of money and was declared bankrupt. 

The federal government intervened when NOGA went into liquidation, with more than $100 million owing, appointing UPS as the operator of the ageing vessel. UPS previously held the contract when the offshore regulator shut the vessel down over safety concerns, forcing NOGA into administration. 

Today UPS parent company GR Engineering announced it had been given a longer-term contract which will end on October 31 this year to effectively watch over the vessel.

"We are pleased to continue working with the Department and relevant regulatory bodies to safely operate and maintain the Northern Endeavour FPSO whilst it remains in a non-producing state under the Northern Endeavour Temporary Operations Program," GR Engineering managing director Geoff Jones said. 

The contract is expected to be worth approximately A$32 million with money coming directly from the public purse. 

NOGA's fiasco has been an embarrassment for the Australian oil and gas industry, and new federal resources minister Keith Pitt has not held back, labelling the situation a "wake-up call" to industry on his first day in Cabinet in February after he replaced Matt Canavan. 

Canavan, despite seeing himself as friend to both industry and all hydrocarbons great and small, was adamant tax payers should not bear the cost but rather industry should chip in, something which horrified peak lobby body APPEA. 

Decommissioning of the Laminaria-Corallina fields, including removal of the FPSO and safe plugging and abandoning of the wells, is expected to cost in the region of $200 million. 

Combined, NOGA's liabilities and the decommissioning costs are estimated well over $350 million.

 

 

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