There are calls for Woodside Petroleum to clean up a flogged-out oil production site it runs in the Timor Sea.

Woodside operated the Northern Endeavour oil production ship from 1999 until 2016.

The facility is permanently moored about 550 kilometres north-west of Darwin.

When Woodside at one point announced the site would close, but then paid a group called Northern Oil and Gas Australia (NOGA) $24 million to take it over.

The national safety regulator ordered work stop in July 2019, after it found corrosion at the site had the potential to cause “multiple fatalities”.

The shutdown pushed NOGA into voluntary administration in September and liquidation in February 2020.

The Federal Government has been forced to ensure safety at the site, signing a contract with Upstream Petroleum Services to maintain the ship.

It may also be left with decommissioning and remediation liability, which Woodside estimates could cost $230 million.

British offshore regulatory expert Steve Walker has written a report for the government, which includes evidence that Woodside had announced it would start decommissioning soon after the plant closed in 2016, before signing the deal with NOGA.

Mr Walker says authorities should introduce a “trailing liability” for cases such as these.

The new rules would require owners of offshore production sites remain liable for decommissioning and removal after selling them.

He suggested companies should provide financial surety to cover decommissioning costs.

Officials in the federal resources department are reportedly considering the suggestion.

Resources minister Keith Pitt says the government is working with the oil and gas industry on “options around the recovery of costs” at Northern Endeavour.

Tim Beshara, the federal policy director at the Wilderness Society, says no new oil and gas developments should be approved until an industry-wide audit of liability risk and new laws are in place.

“The right thing for Woodside to do here is to write a cheque to the Australian taxpayer,” he said.

“It’s clear from this report that the mess started when Woodside offloaded their rust bucket to a company that history has shown was not able to deliver on the responsibilities Woodside had promised would be met.”

Woodside does not accept that it should be liable for the clean-up.

“The sale and transfer of the Northern Endeavour to NOGA was properly completed in accordance with Australian laws and regulations,” a spokesperson said.

“From Woodside’s perspective, it was important that the right precedents were set, and the current titleholders held accountable for maintaining operational assets.”