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This periodic update provides information on a number of recent significant legislative and regulatory developments in the funds and financial services industry.
On 20 June 2017, NOPSEMA issued, for public comment, draft guidance note GN1746 titled ‘Change to the titleholder with operational control of activities’ (GN).
The GN is intended to assist incoming and existing holders of offshore petroleum titles ensure ongoing compliance under the Offshore Petroleum and Greenhouse Gas Storage Act 2006 (Cth) (OPGGS Act) and associated regulations when there is a change to the titleholder with operational control of a well or petroleum activity.
Specifically, NOPSEMA has set out detailed recommendations guiding relevant parties in relation to:
The GN will widely apply to the way incoming and existing holders may be expected by NOPSEMA to navigate separate NOPSEMA and NOPTA regulatory processes relating to approvals associated with a WOMP, an EP and dealings and transfers in offshore petroleum titles.
The GN does not seek to introduce changes to the OPGGSA or its regulations. However, NOPSEMA’s recommendations could impact how parties structure, fund and implement acquisitions of interests in offshore petroleum titles where there is a change in operational control.
Public comment on the GN is open until 22 September 2017. Following the comment period, NOPSEMA will publish an updated guidance note.
For the purpose of the GN, a titleholder with operational control is defined as “the entity that has the responsibility for day to day oversight and management of the activity under that entity’s corporate policies, management systems, contracts and other arrangements”.
The scenarios under which a change to the titleholder with operational control can occur include:
The rationale for the GN is that where there is to be a change to the titleholder with operational control, the following separate regulatory processes may need to be managed by incoming and existing titleholders:
NOPSEMA’s recommendations include a process illustrating how a transfer in operational control could be managed and includes details for the order and timing of the separate regulatory processes administered by both NOPSEMA and NOPTA. Figure 1 below is extracted from the GN.
For all relevant parties who may be considering a transfer in operational control of a well or petroleum activity governed by the OPGGS Act, NOPSEMA makes key recommendations that:
The GN addresses the need for greater facilitation, agreement and access to information between an existing titleholder with operational control (as the seller) and an incoming party who is proposing to assume operational control of an activity.
The incoming titleholder is also tasked with additional responsibility to manage the timing of separate NOPTA and NOPSEMA regulatory processes and risks that may arise from this.
By recommending that acceptance of a new WOMP and/or EP coincide with the transfer of operational control and (where applicable) with NOPTA approval of title transfers, the GN will require buyers and sellers of petroleum titles to give extra consideration to:
If you would like to further discuss the implications of the GN or would like assistance on making a submission to NOPSEMA on issues raised in the GN, please contact us.