The National Offshore Petroleum Safety and Environmental Management Authority issued the notice to Woodside citing a repeated failure to "preserve the condition" of the Riser Turret Mooring (RTM) and remove it from the field.

The riser turret mooring system consists of a turret assembly which is integrated to a mooring line fixing the FPSO to the ocean floor.

According to the notice, the riser turret mooring had degraded in at least two areas, namely flooding of a compartment and failing ballast valves.

"The degradation of both of these areas demonstrates that the condition of the RTM is not being maintained," NOPSEMA said.

The Nganhurra FPSO was disconnected from Enfield oil field off the coast of Exmouth in Western Australia in December last year.

The 200 metre-long custom built vessel was then mobilised to Malaysia before being sold. It is currently laid-up.

Despite production and decommissioning work on the Enfield, Woodside still hasn't removed the riser turret mooring which it was required to do under its environmental plan.

"Woodside has not demonstrated that it cannot remove the RTM from the title area or repair it and tow it for disposal on land," NOPSEMA said.

Woodside said that during initial preparations for removal it had identified an issue with one of the ballast compartments on the RTM, which meant the company could not tow it as planned.

The regulator said it had "reasonable grounds" that there was a significant threat to the environment.

"The RTM may become a navigational collision hazard if it sinks as it then may cause a significant threat to other marine users including damaging vessels."

NOPSEMA warned that if an oil tanker were to collide with the RTM it would cause an oil spill from storage tanks and could have a "widespread and long term impact."

However there is a 500 metre exclusion zone in place around the RTM.

"We are considering options to safely remove the RTM from its current location," a Woodside spokesperson said.

"The RTM is located about 38km from North West Cape and 20km from the Ningaloo Marine Park, with no sensitive marine receptors at its immediate location."

The company said it would continue to work with the regulator to address the issue.