Australia: Gas explorers want a 175pc taxation break

Australia: Gas explorers want a 175pc taxation break

THE Australian gas industry needs taxation concessions and national regulatory consistency if it is to meet its “substantial” potential, an Australian Petroleum Production and Exploration Association report to be released today says.
One result of the report is that APPEA is seeking a 175-per-cent investment allowance so explorers in frontier areas would be able to claim 175 per cent of exploration costs as a tax deduction.

The Platform for Prosperity report will be released at APPEA’s national conference that begins in Adelaide today.

The report, 18 months in the making, looks at ways to strengthen the Australian oil and gas industry in the face of challenges such as global warming, declining oil production, skills shortages and escalating costs.

APPEA chief executive Belinda Robinson said Australia’s gas industry could contribute $55 billion in gross domestic product by 2017 but only if it were not discouraged from large projects.

Currently Australia only has two major liquefied natural gas (LNG) operations, the North West Shelf Venture off the Western Australian coast and Santos’s Bayu Undan project near Darwin.

Ms Robinson said that without government action, Australia would see a decline in its oil production, the mothballing of LNG projects and greater national greenhouse-gas production.

As well as the proposed tax concession, the association’s “wish list” developed from the report also includes:

REDUCING capital depreciation for major projects to five years from a current regime which has several different depreciation scenarios.

DEVELOPING a more flexible exploration licensing system to encourage high-risk exploration.

A PRODUCTIVITY Commission review of oil and gas regulation as a first step towards a national regulatory regime.

LEVELLING the taxation playing field between different forms of energy. APPEA says that in some areas gas is taxed at up to 13 times the rate per gigajoule applied to brown coal.

THE introduction of a carbon-pricing mechanism.

Ms Robinson said by quadrupling Australia’s LNG capacity and substantially increasing the use of natural gas for electricity, Australia could prevent 180 million tonnes of greenhouse-gas emissions in the Asia-Pacific region, including 30 million tonnes per year in Australia by 2017.

“If we don’t tackle these issues in a deliberate, considered and rational way, the future of Australia’s petroleum industry, so vital to our economic wellbeing, will not realise its full and substantial potential,” she said.

Federal Minister for Industry, Tourism and Resources Ian Macfarlane will tell the conference today he wants an implementation group set up to look at the options put forward in the report.

His department would “play a role and will be actively pursuing this” with APPEA’s council.

Information from: www.news.com.au

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