Compliance issues haunt Origin

AN ORIGIN Energy internal audit from 2013 revealing a litany of compliance problems across its oil and gas fields in Australia and New Zealand could take years to be brought up to scratch, two of its then-senior executives said in the report.

Anthony Barich

The internal audit, completed in December 2013 and issued in February 2014, assessed Origin’s control environment as “Unsatisfactory”, with control exposures noted across three scope areas, but heavily weighted in the “Governance, policy and direction; management accountability; responsibility and awareness” area.

John Rodda, who was Origin’s general manager production at the time, said the fact that external regulators conducted 15 audits inside 12 months on Origin’s producing assets was “an indicator of an unsatisfactory system of regulatory compliance, although not at a high risk business exposure”

Rodda, who Origin’s first chief risk officer for three years, is now its general manager commercial – upstream, having previously been a senior strategic analyst and a senior petroleum engineer at Santos in the 1980s and ‘90s before joining Origin in 1995.

The Centium Group director Rob McKimm, who worked with Rodda and Origin, said on LinkedIn that Rodda “succeeded in setting the groundwork for Origin’s future risk management processes and practices and guiding a highly diverse business to adopt a more transparent and risk aware culture”

Rodda said in the report that “the path to greater compliance against AS3806 is one of many years”

“The upstream action plan for regulatory compliance improvement is identified as a priority

Paul Zealand, who was then Origin’s CEO Upstream, also said in the audit report that the weaknesses had been “well recognised”, but warned that it would “take some time to mature our disparate and reactive systems to provide adequate first and second line assurance that we are properly compliant”

“The accountability for compliance management within Upstream is not commonly understood by management, is not documented and has not been fully implemented,” the report said.

“Implementation of compliance management at an operational level is inconsistent and ineffective, placing management at increased risk of a compliance breach due to hidden (underlying) organisation factors preventing compliance.”

The report said there were inadequate links between obligations registers, plans and actions; no evidence of obligations risk assessments; no regulator engagement plan and procedure.

There was also no centralised management oversight over licenses, permits, tenures, pipeline rentals and government commitments that could lead to loss of asset(s) for tenures that are not renewed, fines, suspended licenses and imposing of stricter conditions.

All this, it said, had damaged the company’s reputation with both regulators and the external community.

The revelation of the audit – leaked to The Australian, which subsequently re-published the whole report online – follows former compliance manager Sally McDow alleging Origin had bullied and sacked her after claiming to partake in what she believes was a “cover-up” of compliance issues including oil and gas leaks.

Origin has denied her allegations.

The Australian also revealed that Victoria’s Environmental Protection Agency had confirmed Origin was in breach of its licence limits at the Lang Lang processing plant after the company admitted to authorities that the plant in Victoria was producing significantly higher amounts of toxic chemicals than its licence allowed.

Queensland’s Department of Natural Resources also told the newspaper that it would engage Origin about allegations made in McDow’s lawsuit regarding undisclosed or unrecorded oil and gas leaks, including “discharge of oil into aquifers”, at Origin’s Surat Basin wells.

An Origin spokeswoman said the company regularly audits its compliance processes and co-operates with audits by regulators.

“We also have dedicated teams with strong working relationships with regulators and we’re confident that there has been no breach of a compliance reporting obligation,” she said, adding that Origin “operates its assets in a safe and responsible way”