SYDNEY: A Thai government-owned company behind Australia's worst oil spill was on Friday given the go-ahead to continue local operations but will be subject to a rigorous government monitoring programme.

PTT Exploration and Production's response to issues raised by the massive Montara oil spill in the Timor Sea two years ago was a key factor in renewing their licence, Australia's Energy Minister Martin Ferguson said in a statement.

"The company has cooperated fully throughout the review process and demonstrated significant changes to improve its leadership, governance and operating practices," Ferguson said.

Still, its production and exploration licences could be cancelled any time in the next 18 months if the firm fails to meet strict new standards, he said.

A wellhead at the company's Montara oilfield leaked oil and gas condensate for 10 weeks off Western Australia's northwest, in 2009.

Thousands of barrels of oil poured into the sea before it was capped, prompting conservationists to warn of an environmental catastrophe for the region's marine and bird life.

An independent report into the August 2009 incident found "widespread and systemic" shortcomings in PTTEP's procedures were a direct cause of a loss of well control.