The emergency shut down of a massive floating gas production, storage and uploading vessel (FPSO), due to safety concerns, has shed a light on the tenuous financial position of the company that owns it.
The Singapore-headquartered Jadestone Energy company is reported to have a net cash position of just US$7.1 million, with just US$35 million in standby working company.
Jadestone shares lost more than 30% of their value today after the Montara FPSO was shut down due to a gas leak.
Should Jadestone fail, a billion-dollar cleanup cost for the field will be foisted upon the Australian taxpayer.
It's happened before, when the small firm that Woodside sold the Northern Endeavour FPSO to collapsed, leaving the Australian public to foot the bill for an almost billion-dollar cleanup.
Friends of the Earth Offshore Fossil Gas Campaigner Jeff Waters said it is just another example of how the gas industry is taking the Australian public for a ride.
"Here we have another example of a company that hasn't factored the massive costs of decommissioning offshore assets into their balance sheets," Jeff Waters said.
"They spend years making massive profits sucking methane out of the ocean floor — profits which, in this and most cases, end up in other countries — but then leave the rusting hulks for Australian taxpayers to clean up."
Waters said the existing temporary offshore decommissioning levy, which was imposed on the entire offshore industry to pay for the Northern Endeavour cleanup, should be extended and increased to finance the cleanup of the Montara FPSO.
"How and why could a company be allowed to operate a massive gas extraction facility without the funds to ensure they could clean up afterwards?" Jeff Waters asked.
"It just goes to show how much this climate-killing industry gets away with in Australia, and how governments have been captured by the corporate fat cats that run them.
"The government says so-called "trailing liability" will ensure that someone is held to account for the cleanup costs, but how can that possibly be imposed upon a foreign-based company outside of the jurisdiction of Australian courts?"
"This is another Northern Endeavour in the making, and governments are just sitting back and letting it happen."
Key Facts:
- Jadestone's Montara FPSO shut down
- Jadeston doesn 't have the cash to clean up the site
- Aust. taxpayers likely to foot the cleanup costs
