Bills Digest No. 162 2001-02
Petroleum (Submerged Lands) Amendment Bill
2002
WARNING:
This Digest was prepared for debate. It reflects the legislation as
introduced and does not canvass subsequent amendments. This Digest
does not have any official legal status. Other sources should be
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Bill.
CONTENTS
Passage History
Purpose
Background
Main Provisions
Concluding Comments
Endnotes
Contact Officer & Copyright Details
Passage History
Petroleum (Submerged Lands) Amendment
Bill 2002
Date Introduced: 15 May 2002
House: House of Representatives
Portfolio: Industry, Tourism and Resources
Commencement: On Royal Assent
Purpose
To make relatively minor amendments to the
Petroleum (Submerged Lands) Act 1967 relating to offshore
petroleum exploration permits and leases.
In 1967 interest in offshore petroleum resources
led to negotiations between the Commonwealth, the States and
Northern Territory, which produced an agreement regarding joint
responsibility over offshore petroleum exploration and
exploitation. This agreement resulted in the Commonwealth
Petroleum (Submerged Lands) Act 1967 ('the Act') and
eventually complementary 'mirror' legislation in the States and
Territories.
Amongst other things, the Act establishes
entities known as the Joint Authority (JA) and Designated Authority
(DA) respectively. There is a JA and DA for each of the State or
Territory 'adjacent areas'.(1) The JA - which is
comprised of the Commonwealth Resources Minister and his or her
counterpart from the relevant State or Territory - is the
decision-maker regarding the granting of exploration permits,
production and pipeline licences etc. The DA - which is simply the
Minister from the relevant State or Territory - has responsibility
for the more day to day administrative aspects of managing the
offshore petroleum regime in each adjacent area.
Exploration permits can be granted in several
ways under the Act, but the Exploratory Memorandum(2) to
the Bill indicates that current policy is to grant them through a
public tendering progress under section 22. Such permits are
granted on the basis of the proposed exploration work program
submitted by companies wishing to access the relevant exploration
area. Once granted, these permits may be renewed by the holder
several times, allowing a theoretical total 'holding' time of up to
46 years.
In 2000, the Act was reviewed for compliance
with national competition policy (NCP) principles. According to the
Exploratory Memorandum(3), the review concluded that the
maximum holding time should be reduced to allow for greater
competition between companies for access to exploration areas. The
changes to the Act proposed by items 1 and
3 of Schedule 1 of the Bill would mean that an
exploration permit could only be renewed twice, thus giving a
maximum holding time of 16 years. This new limit will only apply to
permits granted for the first time after 1 January 2003. While
there appears to be nothing on the public record on the issue from
APPEA(4), the relevant industry body, it is understood
that there has not been unanimous agreement by the industry to the
idea of reducing the holding time, but the proposed change is
unlikely to opposed given it is not retrospective.
The other substantive change proposed by the
Bill deals with retention leases. Where a petroleum discovery has
been made and duly notified under the Act, the holder of the
exploration permit may apply for a retention lease. This type of
lease is designed for a situation where the discovery is not
currently economically viable but is likely to become so within
fifteen years. As the Act currently stands, the holder of a
retention lease may be required by the DA to re-evaluate
whether discovery has become viable twice during the duration of
the (five year) lease. The NCP review mentioned above concluded
this was excessive in terms of compliance costs. The proposed
changes in item 4 of Schedule 1 accordingly
reduces this to a maximum of one re-evaluation every five
years.
Schedule 1 - Amendment of the
Petroleum (Submerged Lands) Act 1967
Item 3 inserts a new
section 31A that applies exploration permits granted under
section 22 or 27 for the first time on or after 1 January
2003.(5) This proposed change limits the maximum number
of renewals on these permits to two.
Item 4 reduces the number of
times the holder of a retention lease may be required by the DA to
re-evaluate the viability of a petroleum discovery, from twice
every five years to once every five years.
Item 5 is a transitional item
relating to item 4. It provides that if, before
the Bill comes into force, a DA issues a second notice to
re-evaluate the viability of a petroleum discovery within the five
year period of the retention lease, the lease holder does not have
to comply with the notice.
-
- The 'adjacent area' is the area that extends from 3 nautical
miles seawards of each of the State or Territories low water mark
out to a defined boundary on the continental shelf.
- At p. 5.
- At p. 2.
- Australian Petroleum Production and Exploration Association.
- In the case of section 22 permits, the invitation to apply for
a permit must also have been Gazetted on or after 1 January
2003.
Angus Martyn
5 June 2002
Bills Digest Service
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ISSN 1328-8091
© Commonwealth of Australia 2002
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Published by the Department of the Parliamentary Library,
2002.
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