The Queensland Government has announced a new volume-based model for calculating royalties in the oil and gas industry.
Treasurer and Minister for Infrastructure and Planning Cameron Dick said that the new model would support affordable supply for domestic customers, appropriate returns for Queenslanders and fairness for gas producers.
“Queensland’s gas industry continues to do the heavy lifting in supplying the gas for domestic markets in Eastern states, while also meeting the needs of international customers,” the Treasurer said.
“This review has been crucial in ensuring that oil and gas companies are treated fairly, and that Queenslanders receive their fair share of royalties from this important industry.
“The model is transparent, equitable, administratively simpler and locked in for five years.
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“The royalty rates are also locked in for five years to provide certainty for producers.”
The review, undertaken by a working group independently chaired by former South Australian Premier Jay Weatherill, examined different royalty models.
Mr Weatherill concluded that the current royalty regime was not suitable for the existing configuration of the Queensland gas industry and recommended that a volume-based model be adopted.
The volume-based model will see royalties calculated on the volume of gas produced and will include a sliding rate scale and producers’ sales revenue.
The Australian Petroleum Production & Exploration Association (APPEA) said the new approach will help provide certainty that should help ongoing investment in the state.
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APPEA chief executive Andrew McConville said clarity on the government’s policy position was important as industry considered its next round of investment in developing the state’s substantial natural gas resources.
“The decision helps to provide a level of certainty to the industry, which stands ready to contribute strongly to Queensland’s recovery from the sharp economic downturn wrought by the COVID-19 pandemic,” Mr McConville said.
“Now is not the time for continued confusion or ongoing debate about the economic framework for investing in Queensland.
“Predictable regulation is the foundation for investment in the new gas supplies which are urgently needed in the east coast gas market. Today’s announcement providing clarity on the royalty regime moving forward is a step towards helping the development of future gas supplies.”
Mr McConville said the industry looked forward to working collaboratively with the Government in implementation of the changes.
The Queensland Petroleum Royalty Review report can be found here.