Oz Producers Warn of Tax Changes
Changes to the Australian petroleum resource rent tax (PRRT) announced November 2 must be assessed carefully by the oil and gas industry, warned the head of producers' lobby group, the Australian Petroleum Production and Exploration Association (Appea).
"As Australia relies on foreign investment to develop our natural resources, it is vital that we have a stable, competitive tax regime," said CEO Malcolm Roberts. “Investors are always concerned when long-standing tax arrangements change. Since 1987, the PRRT has attracted investment to Australia while delivering A$35bn in revenue for the community.
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“The independent Callaghan Review confirmed the PRRT is an effective profits tax which delivers, over the life of projects, a higher return than royalties. Once a project has recovered its costs and achieves a modest profit, the combination of company tax and the PRRT applies an effective tax rate of 58 cents in the dollar.
“Investors will now need to assess what the proposed changes will mean for future investment in Australia,” he said, as the changes to the treatment of exploration costs could stifle further upstream activity, already at an historic low level. “While Australia has attracted significant investment in liquefied natural gas (LNG) projects over the last decade and global demand for LNG continues to rise, future investment in Australia is far from guaranteed,” he said, adding: “The global gas market is highly competitive and we are not a low cost producer.”
Appea welcomes new acreage in Queensland
The same day, Appea welcomed the Queensland government’s announcement to open up more than 6,600 km² of land for gas exploration. Roberts said that this confirms Queensland’s critical contribution to maintaining secure, competitive gas supply on the east coast.
“The Queensland government deserves to be congratulated for its rolling release of new acreage which underpins domestic gas supply and the state’s strong, growing LNG export industry,” he said, and added: “The latest release means opportunities for more investment in regional Queensland, leading to new, well-paid jobs, more state royalties and more regional infrastructure. The news from Queensland only highlights the lost opportunities in Victoria and New South Wales; states which are more and more dependent on interstate gas supplies."