Crossing borders and regimes: the legal landscape for CCS repurposing

What you need to know

• If you are investing in carbon capture and storage (CCS) projects or looking to repurpose maturing oil and gas assets for CCS, unresolved regulatory gaps could leave you exposed to long-term liabilities you assumed you had exited.
• As governments around the world accelerate their pursuit of net zero targets, a growing patchwork of regulatory gaps is emerging at the intersection of conventional oil and gas operations and CCS projects – raising critical questions about liability allocation, licence conversion, and the ability to achieve a clean exit.
• This article examines the lessons learnt from the joint study conducted by Ashurst and the Oil & Gas Climate Initiative (OGCI) on international CCS regimes governing reservoir licences and transfer liabilities (see here), and sets out what project developers, investors, and current petroleum titleholders need to be thinking about as these regimes continue to evolve.

What you need to do

Engage early with the regulatory framework in your jurisdiction to understand how liability attaches, and persists, across the lifecycle of a CCS project. In particular, consider how the absence of a statutory licence conversion mechanism may affect your ability to manage long-term exposure when transitioning from oil and gas to CCS operations.

Key findings of the report

The study at a glance

Many jurisdictions' CCS regimes have taken heavy inspiration from their existing oil and gas legislative counterpart. For example, Australia's CCS regime largely mimics the existing oil and gas regime pursuant to the Offshore Petroleum and Greenhouse Gas Storage Act 2006 (Cth) (the OPGGSA), with liability under both regimes governed by a directions based framework with broad reaching trailing liability provisions, and almost identical decommissioning provisions.

While the allocation of liability within regimes is relatively clear, ambiguity arises where a project incorporates both regimes (i.e. where the conventional project is still producing while the CCS project is being developed, or there is other cut across). One clear example of this is in respect of how much a regulator will "toll" the decommissioning requirements of an oil and gas project when it is being converted into a CCS project.

Early engagement with regulators and proactive legal planning will be essential as the market continues to mature.

Allocation of CCS liability: two distinct approaches

Two principal approaches to liability allocation emerge from the study. Under the first approach, liability extends beyond the existing titleholder to former titleholders and other parties. This means that a titleholder who transferred title to another party can still in theory be held liable for obligations pursuant to the title. This is evident in jurisdictions such as the United Kingdom, Canada (Alberta), and relevantly, Australia, through its broad reaching trailing liability provisions.

Under the second approach, a titleholder is relieved from all liability once it has transferred its title, with all obligations under the title the responsibility of the new titleholder. This is evident in jurisdictions such as Indonesia and Malaysia.

This distinction is critical as it determines the extent to which a party exiting a CCS project can achieve a statutory "clean exit" from long-term exposure. It is also unclear how these provisions would interact in the conventional context where an existing oil and gas project has been repurposed into a CCS project.

Breaking the titleholder chain: no licence conversion

Perhaps the most significant finding of this joint study is that none of the selected jurisdictions analysed appear to provide for a statutory "conversion" of an oil and gas licence into a CCS licence. The regimes tend to be distinct and require different titles or permits (exploration vs assessment, production vs injection, and retention).

This becomes increasingly important in jurisdictions that extend liability to former titleholders. As the study suggests, it is not abundantly clear whether a "former titleholder" would extend to a former petroleum titleholder of a repurposed CCS project, meaning there is potential for an exiting petroleum party to remain on the hook for future CCS liabilities.

What's next – regulatory reform on the horizon

In response to growing regulatory uncertainty, we are seeing a general uptick in regulator involvement to provide guidance and comfort to project developers. Regulatory engagement has served as a practical mechanism for bridging gaps in the legislative framework.

However, while increased regulator involvement offers a useful interim solution, it is not a substitute for comprehensive legislative reform. As increasingly more CCS projects move from pilot phases to full commercial operations, and as the intersection between conventional oil and gas regimes and CCS regimes give rise to live, rather than hypothetical, issues, we expect that more and more jurisdictions will turn their mind to reforming the various regulatory gaps currently persisting in their CCS regimes.

One example of this shift is already underway in Australia. In November last year, the Australian Government published a consultation paper seeking feedback on reforms to decommissioning, and relevantly, input on the regulatory regime for decommissioning CCS projects. While no formal reforms or government responses have been provided, this shows a willingness from the Australian Government to engage and ensure there is sufficient regulatory certainty afforded to current and future CCS proponents.

Ashurst will continue to monitor international regulatory and legislative CCS developments to ensure it remains at the legal forefront of this industry.

Want to know more? 

• Carbon capture and storage insights and analysis (14 May 2026)
• Indonesia CCS – New Regulation on Carbon Storage (21 February 2025)
• Ashurst advises UK Government on closing of Liverpool Bay CCS project (24 April 2025)