Shell launches new legal action against Woodside and Paladin for $83 million
A complex legal battle between oil and gas giants over a bill to clean up a decrepit floating oil production facility off Australia’s north coast has once again spilled over into the Supreme Court of Western Australia.
Shell filed a lawsuit against Woodside Energy and Paladin Resources seeking more than $83 million after facing a cleanup bill from the federal government for Northern Endeavor.
This means further escalation of the conflict between major resource companies. After Shell files a similar lawsuit for $86.5 million in 2024.
The lawsuit, filed this week, brings the total amount Shell is seeking to recover from Woodside and Paladin to approximately $169.5 million.
The 274-metre Northern Endeavor spent most of its life permanently attached to the seabed, extracting oil from the Corallina and Laminaria fields in the Timor Sea, about 550 kilometers northwest of Darwin.
Woodside was operated as a joint venture between Shell and BHP before the miner sold its stake in the project to Paladin for US$150 million in 2004.
The following year, Shell sold its shares in the project to its joint venture partners: 66.67 percent to Woodside and 33.33 percent to Paladin.
As Northern Endeavor approached the end of its operating life, it was sold to Northern Oil and Gas Australia, which collapsed in early 2020, leaving the platform and the clean-up bill in the hands of the government.
This led to the introduction of an offshore oil tax as the government sought to get resource companies to cover the cost of decommissioning the massive ship, with a $325 million contract for just the first phase of the cleanup.
At the heart of Shell’s claims against Woodside and Paladin is an agreement in 2005 under which it transferred its interest in the joint venture, which is alleged to include “all relevant assets and agreements, including Shell’s interest in Northern Endeavor and seabed infrastructure”.
“At all material times, the oil license holder… had obligations regarding the removal of structures, equipment and property within the license area,” the paper submitted this week said.
Shell was then hit with government tax bills of $41,272,007 and $42,499,708 for fiscal years 2024 and 2025.
However, the article claimed: “Proper construction of Woodside and Paladin [agreements]Woodside and Paladin are obligated to repay and reimburse Shell for the full amount of the 2024 and 2025 OP Assessments, together with future OP Assessment amounts.”
Shell claimed that it wrote to both companies demanding payment, but these demands were rejected.
This week’s article recalls the lawsuit filed in 2024, in which Shell once again claimed to have submitted two letters demanding payment, only for Woodside and Paladin to deny liability.
A spokesman for Woodside said the company continues to defend Shell’s lawsuit but would not comment further as the matter is before the courts.
