This decision has required Woodside to re-enter and re-plug several abandoned wells the department said were at risk of leaking oil.

The drilled and abandoned wells which had been targeting gas for Woodside's Pluto expansion included the Xeres, Kelt and Noblige-2.

The Australian Financial Review quoted a spokesperson for the National Offshore Petroleum Safety and Environmental Management Authority confirming it had revoked a previous directive.

"Woodside no longer has to act on the original directions and the matter is finalised," the spokesperson said.

The conflict between the two regulators comes after Woodside disagreed with the DMP directive requiring it to plug wells adhering to stricter criteria.

Woodside estimated the costs of re-plugging would be $20 million.

While Woodside seemed to have found an ally in NOPSEMA, the DMP directive was backed by Chevron, which had raised concerns that its nearby Wheatstone LNG project would be vulnerable unless Woodside used a more stringent plugging method.