QLD’s new gas regime could deliver more revenues in times of plenty
Australia’s second largest gas exporting state has introduced a new ‘volume-based’ gas royalty regime that is aimed at creating and supporting more jobs and industries.
The volume-based model introduced by Queensland will see royalties calculated on the volume of gas produced and will include a sliding rate scale and producers’ sales revenue.
This is expected to support producers in times of relatively low prices while providing high revenues for the state in times of higher gas prices.
Treasurer and Minister for Infrastructure and Planning Cameron Dick says 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,” Dick 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.”
Oil and gas industry body the Australian Petroleum Production and Exploration Association (APPEA) says the new regime provided clarity that should help ongoing investment in the state.
“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,” APPEA chief executive Andrew McConville said.
“Predictable regulation is the foundation for investment in the new gas supplies which are urgently needed in the east coast gas market.”
Liquefied natural gas exporter Santos (ASX:STO) also welcomed the new regime, which it said will guarantee that Queenslanders will receive a fair return for the use of non-renewable resources.
Managing director Kevin Gallagher says the new model addresses past equity and integrity issues with industry participants now on a level playing field.
“The new Qld royalty model is simple, efficient, equitable and transparent. It provides certainty to encourage ongoing investment in new gas supply and it will incentivise producers to innovate and reduce their cost of supply, which in turn will help put downward pressure on gas prices,” he added.
With the new royalty regime in place, Queensland is releasing five parcels of land totalling 1,500sqkm in the resource-rich Surat and Bowen basins in the state’s southwest.
“It’s essential that we keep exploration underway to identify the resources projects and jobs of the future as we emerge from COVID-19,” Mines Minister Dr Anthony Lynham said.
“Gas explorers have already expressed interest on these parcels of land previously, so it makes sense to open them for tender.”
The new acreage release comes after tenders closed for 12 areas covering more than 6,700sqkm of other land in the south and central west of Queensland. These include 872sqkm that are reserved for the domestic gas market.