Petroleum and Greenhouse Gas Storage Amendment (Petroleum Pools and Other Measures) Bill 2016
Monday 19 September 2016 @ 11.58 a.m. | Legal Research
The Commonwealth Parliament has introduced the Petroleum and Greenhouse Gas Storage Amendment (Petroleum Pools and Other Measures) Bill 2016 into the Legislative Assembly on 15 September 2016. The purpose of the Bill is to amend the Offshore Petroleum and Greenhouse Gas Storage Act 2006 (Cth) (the Act) to ensure the ongoing validity of apportionment agreements in the event it becomes apparent that an agreement relates to an area which contains multiple petroleum pools as opposed to a single discreet pool. The Bill also ensures legislative support for government regulations which provide refunds and remittals of environment plan levies and safety case levies.
Apportionment Agreements
The Bill recognises and responds to a limitation in the Act with regards to apportionment agreements. Currently, section 54 of the Act, which provides for apportionment of petroleum between Commonwealth and State jurisdictions, applies where a petroleum pool straddles a jurisdictional boundary, and the relevant Commonwealth and State titles on both sides of the boundary are held by the same titleholder. According to the Minister for the Environment and Energy, Josh Frydenberg:
“The purpose of the apportionment is to provide certainty for the titleholder and government parties into the future as to the revenue regimes that will apply to the petroleum once it is recovered. In the case of a titleholder whose resource straddles a Commonwealth-state boundary, an up-front apportionment between jurisdictional tax and royalty regimes may be a key factor in the titleholder's commercial decision whether to commit to further investment in the project at that point in time.”
The limitation of the current section 54 is that it only contemplates that an apportionment agreement relates to a single discreet pool that straddles a boundary. However, according to the explanatory memorandum accompanying the Bill, this assumes there is a greater level of knowledge about the particular pool than is often available at the early stages of a project, which is when section 54 agreements are negotiated. If it is later discovered through further technical investigation that the apportionment agreement encompasses multiple petroleum pools then the agreement would fail by virtue of section 54.
Consequently, “the amendments in this bill will therefore expand section 54 to ensure the ongoing validity of apportionment agreements if it becomes apparent that an agreement relates to an area which in fact contains multiple petroleum pools rather than a single pool.” The amendment also extends the operation of section 54 to agreements about a specified part of the seabed that contains a common pool, but where connectivity between the jurisdictions may not necessarily by just the pool.
Refunds of Environment Plan Levies
The Bill will also insert a regulation-making power into the Act so that there is a clear legal basis for regulations to provide for the refund and remittal of environment plan levies. The inserted section will commence retrospectively to ensure the validity of previous refunds in accordance with the levies regulations. Currently, the Offshore Petroleum and Greenhouse Gas Storage (Regulatory Levies) Regulations 2004 provides for the refund and remittal of amounts of the environment plan levies in certain circumstances. Insertion of this section will validate the regulation’s functions.
The Bill is currently awaiting second reading debate in the Legislative Assembly.
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Sources:
Petroleum and Greenhouse Gas Storage Amendment (Petroleum Pools and Other Measures) Bill 2016, Bill, Second Reading Speech and Explanatory Memorandum as published on TimeBase LawOne
