A controversial plan to explore for oil in the Great Australian Bight next year is a step closer, with Norwegian oil company Equinor winning environmental approval for a well off the South Australian coast.

Key points: Equinor must gain two more approvals before exploration in the Bight can begin

Equinor must gain two more approvals before exploration in the Bight can begin The Norwegian oil company plans to drill about 372 kilometres south of the Nullarbor coast

The Norwegian oil company plans to drill about 372 kilometres south of the Nullarbor coast Reactions to the environmental approval have been mixed

The National Offshore Petroleum Safety and Environmental Management Authority (NOPSEMA) has accepted Equinor's environmental plan, the second of four approvals required before drilling activity can begin.

Drilling in the Bight has been fiercely opposed by environmental and community groups which are concerned about the threat of a catastrophic oil spill.

Under Commonwealth law, energy companies must have a petroleum title, accepted environmental plan, well operations management plan and facility safety case before they can undertake offshore oil and gas activity.

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The environment approval process took eight months, with NOPSEMA reviewing more than 30,000 submissions and twice requiring Equinor to modify and resubmit its plans.

The company, which is majority owned by the Norwegian Government, plans to drill its Stromlo-1 exploration well about 372 kilometres south of the Nullarbor coastline.

Equinor plans to use a mobile offshore drilling unit, supported by three ships and two helicopters.

Similar plans to drill the bight have previously been abandoned by BP and Chevron.

In a statement, NOPSEMA said it had "imposed stringent conditions on its approval to ensure a high level of protection to the environment, in recognition of the region's unique values and sensitivities".

"In the event Equinor secures all approvals, it will be subject to NOPSEMA's inspection and compliance regime," the statement read.

"Failure to comply with the environment plan will result in enforcement action."

The approval will allow the company to drill 24 hours a day for about 60 days between November and April in either 2020-21 or 2021-22.

Equinor's environmental plan includes modelling of what would happen in a worst-case scenario oil spill.

It shows oil could spread to shorelines from Eyre Peninsula to southern Victoria and north-west Tasmania.

'A pre-Christmas horror show', say Greens

The approval was cautiously welcomed by the South Australian Government.

Environmentalists say drilling in the Bight poses a major threat to marine life. ( Supplied: Richard Robinson/Greenpeace )

"Exploration for oil and gas in offshore Australia has the potential to create significant employment and economic opportunities for South Australia," Minister for Energy and Mining Dan van Holst Pellekaan said.

"The State Government expects and insists upon the highest environmental standards for exploration in the Bight."

But the drilling company's opponents hit out at the decision, with Greens senator Sarah Hanson-Young declaring it a "pre-Christmas horror show for South Australia".

"On the eve of Christmas, when many South Australians will be spending their summer break enjoying the pristine shores of our beautiful beaches and coastline, this approval will be devastating news," the senator said.

The South Australian Chamber of Mines and Energy (SACOME) said the decision was an important milestone which could potentially result in the creation of 2,000 long-term jobs.

"Equinor has drilled more than 6,000 wells on the Norwegian continental shelf and has an excellent track record of drilling in deep-water offshore environments earned over 45 years," SACOME's chief executive Rebecca Knol said.

"Offshore oil exploration has been occurring safely in the Great Australian Bight for more than 40 years and, given Australia's reliance on oil in the coming decades, it is important that exploration continues.

"In neighbouring Victoria more than 1,000 wells have been drilled in the Bass Strait over the past 50 years, without impacting the tourism industry along the Great Ocean Road, King Island fresh produce or the large commercial fishing fleets."