New research reveals major gaps in disclosure of decommissioning liabilities for oil and gas infrastructure

The report Asset Retirement Obligations: What Lies Beneath? from financial think tank Carbon Tracker finds that the quality and completeness of reporting of this information varies significantly, despite companies in all three jurisdictions using the same international accounting standards.

Carbon Tracker assessed 38 oil and gas companies’ financial statement disclosures of asset retirement obligations (AROs) – related to future decommissioning and cleanup costs – using 15 disclosure metrics. Information for every metric was provided by at least one company, showing that this disclosure is realistic and achievable. Despite this, the findings reveal substantial gaps: the UK oil and gas companies disclosed, on average, 45% of the relevant information required to assess the full extent of ARO liabilities, Canadian companies 42%, and Australian companies, just 19%. The report points to a potential correlation between more observable regulatory activity in the UK and Canada (compared with Australia), and the quality of disclosure. It recommends that financial market regulators include a focus on financial statement transparency about AROs in their oversight and supervisory priorities for the coming year.

The report follows the publication of new guidance in November 2025 by the International Accounting Standards Board (IASB), which sets International Financial Reporting Standards (IFRS). The IASB’s guidance clarifies how to disclose uncertainties in financial statements. For oil and gas companies, this relates to reporting information about decommissioning and clean-up liabilities in their accounts.

Commenting, Barbara Davidson, Head of Capital Markets Transparency at Carbon Tracker, said: “Our analysis shows that oil and gas companies are routinely failing to provide sufficient information needed by investors to assess the scale, timing and uncertainty of companies’ decommissioning obligations. Investors cannot properly evaluate the impact of future ARO payments on a company’s liquidity, compare companies across jurisdictions or understand the risks embedded in these long-term liabilities without transparent assumptions, payment schedules and sensitivities. Yet our findings also show that better disclosure is achievable. As the energy transition accelerates, incomplete reporting leaves markets exposed to growing financial and regulatory risks.”

Commenting, Rob Schuwerk, Head of Research at Redwater Insights, part of the Polluter Pays Project, said: “Differences in ARO reporting across the UK, Canada and Australia, despite being governed by the same accounting standards, demonstrate the need for greater regulatory activity to improve transparency and compliance with existing guidelines by oil and gas companies. The energy transition increases the potential for these liabilities to be accelerated, which only increases the need for full transparency.”

The global scale of AROs is vast. In 2023, Carbon Tracker estimated that decommissioning existing oil and gas infrastructure in the US alone would cost over US$1.2 trillion, and that total global costs could surpass US$4 trillion. The problem is becoming more urgent as the energy transition gathers pace and some oil and gas infrastructure will likely need to be retired earlier than planned. This means that the resources to pay for clean-up will be needed sooner than planned, while production revenue will not be available as a source to cover these costs.

Read the article online at: https://www.worldpipelines.com/business-news/17122025/new-research-reveals-major-gaps-in-disclosure-of-decommissioning-liabilities-for-oil-and-gas-infrastructure/