ExxonMobil’s Environmental and Economic Scandals in Australia
We examine ExxonMobil’s alleged decades-long campaign of deception, focusing on the environmental and economic impacts in Australia.
The company’s recent environmental spills in the Bass Strait, tax avoidance practices, regulatory oversight issues, and the broader implications for Australia’s economy and environment.
Key takeaways
- ExxonMobil’s operations in the Bass Strait caused several harmful spills, damaging marine ecosystems and eroding public trust.
- ExxonMobil faces allegations of avoiding billions in taxes, contributing little to Australia’s economy despite significant revenues.
- Oversight by Australian authorities, like NOPSEMA, has been criticized for insufficient enforcement following significant environmental breaches.
- High gas prices and job risks in Australia’s energy sector are linked to ExxonMobil’s operations, affecting industries and households.
- Stronger policies, corporate accountability, and public engagement are necessary to address ExxonMobil’s environmental and economic challenges.
Australia’s Bass Strait, a vital ecological region teeming with marine life, has become the backdrop for a troubling narrative involving ExxonMobil, one of the world’s largest oil and gas corporations.
In recent years, ExxonMobil has faced allegations of environmental negligence, deceptive practices, and aggressive tax avoidance, all of which have significant implications for Australia’s environment and economy.
Environmental Spills in Australia’s Bass Strait
The Bass Strait, located between mainland Australia and Tasmania, is renowned for its rich biodiversity and is crucial for local fisheries and tourism. ExxonMobil’s operations in this area have come under intense scrutiny due to a series of environmental spills that have caused significant harm to the marine ecosystem.
In September 2024, a major incident occurred when up to 21,000 liters of diesel leaked from an ExxonMobil facility into the Bass Strait. It went largely unreported in the press.
Diesel spills are particularly harmful to marine environments, causing toxicity to fish and invertebrates, contaminating seabirds’ plumage, and leading to long-term habitat degradation. The spill raised serious concerns about ExxonMobil’s ability to manage its offshore infrastructure safely.
Earlier this year, two gas condensate spills further highlighted the company’s environmental challenges. On April 6, 2024, a pipeline failure at the Kingfish A rig resulted in the leak of corrosion inhibitor chemicals and gas condensate into the ocean. Gas condensate, a mixture of hydrocarbons, poses severe risks to marine life due to its toxicity and persistence in the environment.
A second spill occurred on May 29, 2024, at the Marlin A platform, where approximately 200 liters of gas condensate leaked into the ocean.
Alarmingly, the Australian Resources Minister was not informed about this incident for up to five days, indicating deficiencies in reporting and regulatory oversight.
Environmental scientists emphasize that even small quantities of hydrocarbons can have significant ecological impacts. Hydrocarbon spills disrupt the food chain, affecting everything from plankton to larger predators. The toxic components can lead to reproductive issues, genetic mutations, and increased mortality rates among marine species.
These incidents have not only caused immediate environmental damage but have also eroded public trust in ExxonMobil’s commitment to environmental responsibility. The company’s plans to repurpose aging offshore infrastructure for carbon capture and storage – a technology criticized for its ineffectiveness – have further intensified concerns.
ExxonMobil’s Tax Avoidance Practices in Australia
ExxonMobil’s financial activities in Australia have drawn criticism over allegations of aggressive tax avoidance, raising questions about corporate responsibility and economic fairness. Despite reporting substantial revenues, the company has declared little to no taxable income, resulting in minimal or no income tax payments over several years.
In the 2015–16 financial year, ExxonMobil reported approximately AUD 6.7 billion in total income but declared zero taxable income and paid no corporate income tax. This pattern persisted in subsequent years, highlighting a significant discrepancy between the company’s earnings and its contributions to Australia’s tax revenue.
Comparatively, other oil and gas companies operating in Australia, such as Woodside Petroleum, reported similar or slightly higher total income but paid substantial taxes. Woodside Petroleum declared AUD 1.6 billion in taxable income and paid over AUD 426 million in income tax during the same period.
ExxonMobil’s corporate structure has raised suspicions of profit-shifting and tax minimization strategies. The company’s Australian operations are reportedly owned through shell companies in the Netherlands and the Bahamas, jurisdictions known for favorable tax laws. This complex ownership arrangement potentially allows ExxonMobil to shift profits out of Australia, thereby reducing its taxable income.
Tax experts have criticized these practices. Multinational corporations utilizing complex ownership structures in tax havens undermine the integrity of our tax system. It shifts the tax burden onto smaller businesses and individual taxpayers. Corporate tax avoidance is endemic in Australia. Fewer public services, infrastructure, and social programs are just some of the costs of corporate tax dodging.
These allegations suggest that ExxonMobil is not contributing its fair share to the Australian economy, despite benefiting from the country’s natural resources and infrastructure.
The implications extend beyond lost tax revenue, affecting public services and increasing the financial burden on ordinary Australians.
Regulatory Oversight and Accountability
The effectiveness of Australia’s regulatory bodies, particularly the National Offshore Petroleum Safety and Environmental Management Authority (NOPSEMA), has come under scrutiny in light of ExxonMobil’s environmental incidents and alleged tax avoidance.
NOPSEMA is responsible for regulating offshore oil and gas activities, ensuring safety and environmental protection. Critics argue that NOPSEMA has failed to enforce compliance adequately. Delays in reporting incidents, as seen with the May 29 spill at the Marlin A platform, suggest deficiencies in oversight. Additionally, the lack of significant penalties or corrective measures against ExxonMobil has raised questions about the regulator’s effectiveness.
NOPSEMA is supposed to regulate the environmental management of the offshore fossil fuel industry, but coastal communities are losing confidence in the regulator, which appears more of an enabler than an enforcer.
The federal and state governments have been urged to take stronger action. The Victorian government’s environmental agency has expressed alarm over repeated spills affecting its coastline. Both the Victorian and Federal governments need a plan to fix this and hold fossil fuel corporations to account.
ExxonMobil’s Perspective
In response to the allegations, ExxonMobil has issued statements addressing environmental incidents and tax practices. The company expressed regret over the spills, committing to remediation efforts and cooperation with authorities.
Regarding tax practices, ExxonMobil asserts that it complies with all applicable tax laws and contributes significantly to the Australian economy through various taxes and royalties. The company emphasized that its tax contributions include not only income taxes but also royalties, excise taxes, and other payments.
ExxonMobil has also outlined actions taken to address concerns. Environmentally, the company has initiated clean-up operations, conducted environmental assessments, and implemented enhanced safety protocols. In terms of community engagement, ExxonMobil has engaged with local communities to address concerns and supported environmental conservation initiatives.
Broader Implications for Australia’s Economy and Environment
ExxonMobil’s activities in Australia have broader implications that extend beyond immediate environmental incidents and tax issues. The company’s role in the domestic energy market, particularly in relation to gas prices, has significant economic consequences.
Despite being a major gas producer, Australia faces high domestic gas prices, which have increased operating costs for industries reliant on gas and affected competitiveness and employment.
ExxonMobil, along with its partner BHP, is one of the largest suppliers of gas to the east coast market. The tripling of gas sales prices has put pressure on households and threatens large manufacturing businesses, risking thousands of jobs.
Environmentally, the incidents challenge Australia’s ability to meet international obligations related to climate change and environmental protection. The reliance on fossil fuels and the environmental risks associated with their extraction and production contrast with global trends toward renewable energy and sustainable practices.
The environmental spills in the Bass Strait have had tangible impacts on marine ecosystems and local communities, while allegations of aggressive tax avoidance raise questions about the company’s contributions to the nation’s welfare.
The effectiveness of regulatory bodies like NOPSEMA is essential in safeguarding environmental and public interests. Strengthening regulations, increasing transparency, and ensuring corporate accountability are necessary steps toward addressing these challenges.
There is a clear need for a multi-faceted approach that involves government action, corporate responsibility, and public engagement. The government must implement robust policies that ensure environmental protection and fair economic practices. ExxonMobil must embrace sustainable operations, transparent reporting, and genuine community engagement.
Society must advocate for responsible corporate behavior and support initiatives that promote environmental stewardship.
Without significant changes, the environmental and economic costs are likely to escalate, compromising Australia’s natural heritage and economic prosperity.
Proactive measures can lead to a sustainable future where economic development does not come at the expense of the environment.
ExxonMobil In Hot Water
ExxonMobil has faced numerous legal challenges and accusations of environmental failings. These issues span multiple countries, jurisdictions and cover a range of environmental and climate-related concerns.
Legal Challenges
California Lawsuit
In September 2024, California Attorney General Rob Bonta filed a lawsuit against ExxonMobil, accusing the company of knowingly contributing to the plastic pollution crisis while misleading the public about recycling as a solution. This lawsuit is the first of its kind where a state has targeted a major plastics manufacturer for environmental harm. The suit seeks billions of dollars in damages and aims to stop ExxonMobil from using terms like “advanced recycling” and “recyclable” in its marketing.
Massachusetts Lawsuit
In 2019, the Massachusetts Attorney General filed a complaint against ExxonMobil for allegedly:
- Failing to disclose climate change risks to investors
- Misrepresenting its business practices related to carbon costs
- Misleadingly advertising its products
- Failing to disclose its products’ impacts on climate change
- Engaging in deceptive greenwashing campaigns
The Massachusetts Supreme Judicial Court ruled in 2022 that this lawsuit could proceed, rejecting ExxonMobil’s attempt to dismiss it.
Conservation Law Foundation Lawsuit
The Conservation Law Foundation (CLF) sued ExxonMobil for failing to prepare its oil terminal in Everett, Massachusetts, for the impacts of climate change. This case was settled in December 2023 after ExxonMobil decided to permanently close the facility.
Environmental Failings
ExxonMobil was responsible for the biggest and most devastating oil spill disaster, which occurred on March 24, 1989, in Prince William Sound, Alaska.
It polluted 1,300 miles (2,092 kilometers) of shoreline. The oil spread as far south as the southern end of Shelikof Strait between Kodiak Island and the Alaska Peninsula.
Wildlife casualties included:
- 100,000 to 250,000 seabirds
- At least 2,800 sea otters
- Approximately 12 river otters
- 300 harbor seals
- 247 bald eagles
- 22 orcas
- An unknown number of salmon and herring
Plastic Pollution
ExxonMobil is accused of substantially contributing to the plastic pollution crisis. The California lawsuit alleges that the company deceived the public for nearly half a century about the effectiveness of recycling as a solution to plastic waste.
Climate Change Disclosure
The company has been accused of failing to adequately disclose climate change risks to investors and consumers, potentially misleading them about the long-term viability and environmental impact of its business.
Gas Flaring in Guyana
ExxonMobil has faced criticism and legal challenges in Guyana for its continued practice of gas flaring, which violates local environmental laws. The company has paid at least $4.5 million in fines for this practice.
Failure to Meet Environmental Commitments
Despite making sweeping announcements about plans to curb global emissions, including a pledge of zero flaring by the end of 2022, ExxonMobil has struggled to meet these commitments in practice, particularly in its Guyana operations.
These legal challenges and environmental failings highlight the ongoing scrutiny ExxonMobil faces regarding its environmental practices and transparency about climate-related risks. The outcomes of these cases could have significant implications for the company’s operations and reputation in the coming years.
Resources (*main article)
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- Tax Justice Network. (2017). Is Exxon Paying a Fair Share of Tax in Australia?.
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