The north-west shelf project in Western Australia which the Tax Justice Network says pays high royalties. Photograph: Graeme Robertson for the Guardian
The Turnbull government must introduce a 10% royalty on all offshore oil and gas projects in Australia to ensure taxpayers start getting a fair return on their natural resources, the Tax Justice Network says.
The group has called for the petroleum resource rent tax (PRRT) to be overhauled, saying there were too many opportunities under its regime for offshore oil and gas companies to exploit transfer pricing, with direct impacts on PRRT credits and profits.
In a submission to the PRRT review, the Tax Justice Network said a 10% royalty ought to be applied to offshore oil and gas projects in commonwealth waters that were only subject to the PRRT.
It said a 10% royalty needed to be charged because the PRRT which was designed in the 1980s for crude oil projects, but which had failed to keep up with developments in the industry was failing to collect adequate revenue.
The treasurer, Scott Morrison, admitted last year that revenues from the PRRT had halved since 2012-13, and crude oil excise collections had fallen by more than half.
He announced a formal review of the PRRT regime in November after a rapid decline in revenues from the tax.
Jason Ward, from the network, said a 10% royalty would raise between $4bn and $6bn over the next four years.
He said the royalty system should be similar to existing state and Commonwealth royalties that already apply to all other oil and gas projects in Australia.
It should be deductible from PRRT, and the PRRT should remain as a backstop to collect additional revenue if and when prices increased substantially and when existing PRRT credits were exhausted.
With Australia poised to be the worlds largest exporter of LNG but projected to generate little direct government revenue for decades, there is a major problem that needs to be addressed, he said.
At the moment projects in commonwealth waters are getting millions of tonnes of LNG effectively for free.
No other industry, including coal, iron ore and onshore gas, get given the total cost of their investment (plus uplift) in free resources before they begin paying for that resource.
This policy will level the playing field across the oil and gas industry. At the moment projects in commonwealth waters are getting a competitive advantage over onshore projects and the north-west shelf who pay much higher royalties.
All of the major companies, Shell, Chevron, BHP, Woodside and BP, already pay under our proposed model through their ownership of the north-west shelf project. They have been happy to pay under this model for years without complaint. The north-west shelf shows they still make huge profits under this type of royalty regime.
Ward said mature oil projects, such as BHP in the Bass Strait who already pay PRRT, would not be affected given the royalty would be fully deductible from the PRRT.
This proposal we believe ensures a fair return to the Australian people while still encouraging investment by maintaining our royalty regime as one of the most generous in the world, he said.
We call on the industry to support this proposal to the commonwealth government.
The problems raised by the Tax Justice Network are similar to those raised by tax expert Dr Diane Kraal, from Monash University.
Her submission warned flaws in the PRRT regime meant Chevrons giant Gorgon gas project off WA would not pay the tax until at least 2030, despite decades of operation.
Kraal said her modelling showed $5bn in revenue would be raised from Gorgon alone by 2030 if royalties were reintroduced.
She said her research indicated other natural gas projects in commonwealth waters should also be subject to commonwealth royalties, including Chevrons Wheatstone, Woodsides Pluto LNG project, and Inpexs Ichthys project.
Woodside Petroleum used its submission to argue against any changes to the PRRT.
It said the PRRT had been operating as intended, despite declining revenues from the tax recently.
It said the regime had delivered $200bn worth of projects over the past decade, and Woodside had paid $2bn in PRRT since 2001.
As a profits-based tax, it is not unusual to have declining PRRT at a time of declining oil and gas prices and prior to these projects recouping their costs, its submission said.
Woodside pays billions of dollars of taxes in Australia. The PRRT is just one part of our tax contribution but increasing it could put other tax revenues at risk by making future projects unviable.
Woodside has an ownership stake in three of Australias major undeveloped gas resources. As the leading Australian gas producer, we want to develop these resources and deliver significant benefits to the Australian people.
We urge the PRRT review team to consider carefully the substantial impact of any changes to the current fiscal settings that could jeopardise existing and future investments.
Read more:
Coalition urged to charge 10% royalty on offshore oil and gas projects - The Guardian
- Equinor stepping up gas investments at North Sea Troll project - Offshore magazine - May 25th, 2024 [May 25th, 2024]
- Coastal community meetings on proposed offshore wind leases to be held - Curry Coastal Pilot - May 25th, 2024 [May 25th, 2024]
- Extending USV surveying from offshore to inland waters - Hydro International - May 25th, 2024 [May 25th, 2024]
- People on the move | Offshore - Offshore magazine - May 25th, 2024 [May 25th, 2024]
- Coastal Virginia Offshore Wind project reaches key milestone - Daily Energy Insider - May 25th, 2024 [May 25th, 2024]
- BOEM Issues Final EIS for Two Wind Projects Offshore New Jersey - Offshore Engineer - May 25th, 2024 [May 25th, 2024]
- Why least-cost auctions are 'unrealistic' for offshore wind on US west coast - Windpower Monthly - May 25th, 2024 [May 25th, 2024]
- Fifth Arctic and Offshore Patrol ship officially named HMCS Frdrick Rolette - CTV News Atlantic - May 25th, 2024 [May 25th, 2024]
- CAISO Approves Transmission Plan Integrating Offshore Wind - North American Windpower - May 25th, 2024 [May 25th, 2024]
- TotalEnergies plans to invest $600m in oilfield offshore Congo - Offshore Technology - May 25th, 2024 [May 25th, 2024]
- Two wind farms completed offshore western Taiwan - Offshore magazine - May 25th, 2024 [May 25th, 2024]
- HSM Offshore Energy doubles fabrication capacity with second location in the Netherlands - WorldOil - May 25th, 2024 [May 25th, 2024]
- Floating wind could transform offshore energy but companies need to work together and embrace innovation - Professional Engineering - May 25th, 2024 [May 25th, 2024]
- rsted ditches deal on $625M vessel for installing turbines - E&E News by POLITICO - May 25th, 2024 [May 25th, 2024]
- Biden's unnecessary regulations on offshore oil rigs threaten jobs in Gulf States - Northeast Mississippi Daily Journal - May 25th, 2024 [May 25th, 2024]
- Sonatrach awards $2.3bn contract for gas-boosting work in Algeria - Offshore Technology - May 25th, 2024 [May 25th, 2024]
- Readers sound off on offshore wind projects, Diddy's assault and Hannah Arendt - New York Daily News - May 25th, 2024 [May 25th, 2024]
- Fifth Arctic and offshore patrol vessel officially named HMCS Frederick Rolette - SaltWire Halifax powered by The Chronicle Herald - May 25th, 2024 [May 25th, 2024]
- New York Student Equity Fund Available for State of the Science Workshop on Offshore Wind Energy, Wildlife, and ... - New York City Central Labor... - May 25th, 2024 [May 25th, 2024]
- rsted-Eversource Partnership Announces Cancellation of Agreement for Charybdis (Updated) - CT Examiner - May 25th, 2024 [May 25th, 2024]
- XINSURANCE Named Title Sponsor Of Next Weeks Shootout Offshore Race - SpeedontheWater - May 25th, 2024 [May 25th, 2024]
- Equinor to invest $1.1bn in Troll gas field to boost production - Offshore Technology - May 25th, 2024 [May 25th, 2024]
- Senate passes offshore wind bill - delawarebusinessnow.com - May 25th, 2024 [May 25th, 2024]
- Equinor Makes Discovery in Svalin Field Offshore Norway - Rigzone News - May 25th, 2024 [May 25th, 2024]
- Offshore cable ops resume at Ireland-Wales interconnector after a break - Offshore Energy - May 25th, 2024 [May 25th, 2024]
- Primacy or Offshore Balancing: A Conceptual Analysis of U.S.Foreign Policy - Modern Diplomacy - May 25th, 2024 [May 25th, 2024]
- Cyan, Ocean Infinity partner for APAC offshore wind projects - Offshore Energy - May 25th, 2024 [May 25th, 2024]
- First Of The 176 Monopile Foundations Fitted At Dominion's Virginia Offshore Wind Farm - Marine Insight - May 25th, 2024 [May 25th, 2024]
- Mexico needs to act to stem oil and gas production declines, report claims - Offshore magazine - May 25th, 2024 [May 25th, 2024]
- California congressman urges closer consultation with tribes on offshore wind - Jackson Hole News&Guide - May 25th, 2024 [May 25th, 2024]
- EURO 2024 Young Player of the Tournament Offshore Odds, Preview, and Prediction (2024) - The Latest Sports ... - OffshoreSportsbooks.com - May 23rd, 2024 [May 23rd, 2024]
- Irish 2,000 Guineas Offshore Odds, Preview, and Prediction (2024) - The Latest Sports Betting News - OffshoreSportsbooks.com - May 23rd, 2024 [May 23rd, 2024]
- Gervonta Davis vs Frank Martin Offshore Odds, Preview, and Prediction (2024) - The Latest Sports Betting News - OffshoreSportsbooks.com - May 23rd, 2024 [May 23rd, 2024]
- Roadmap for energy skills transition secures backing from wind, oil and gas sectors - Renewable Energy Magazine - May 23rd, 2024 [May 23rd, 2024]
- Spatiotemporal distribution, evolution, and complementarity of wind and waves in China's offshore waters and its ... - ScienceDirect.com - May 23rd, 2024 [May 23rd, 2024]
- Irish 1,000 Guineas Offshore Odds, Preview, and Prediction (2024) - The Latest Sports Betting News - OffshoreSportsbooks.com - May 23rd, 2024 [May 23rd, 2024]
- DNREC and US Wind hold offshore wind meeting June 5 in Lewes - wrde.com - May 23rd, 2024 [May 23rd, 2024]
- Adele To Release New Album 2024 Offshore Odds, and Prediction - The Latest Sports Betting News - OffshoreSportsbooks.com - May 23rd, 2024 [May 23rd, 2024]
- Offshore Wind Public Information Session in Lewes Scheduled for June - WBOC TV 16 - May 23rd, 2024 [May 23rd, 2024]
- RWE Investigates Impact of Artificial Reefs at Baltic Sea Offshore Wind Farms - Greentech Lead - May 23rd, 2024 [May 23rd, 2024]
- Biden administration hit with one more lawsuit over LNG permitting freeze - Offshore Energy - May 23rd, 2024 [May 23rd, 2024]
- GIW to Discuss Bigger Slurry Pump Trends at Oil Sands Conference - Offshore Technology - May 23rd, 2024 [May 23rd, 2024]
- CIP Inaugurates the Changfang-Xidao Offshore Wind Farms in Taiwan - Renewable Energy Magazine - May 23rd, 2024 [May 23rd, 2024]
- Offshore Wind Turbine Installation Vessel Market will reach US$ 5.46 Billion by 2030, at a CAGR of 14.9% - openPR - May 23rd, 2024 [May 23rd, 2024]
- Norway Boost Offshore Wind Ties with East of England - Offshore Engineer - May 23rd, 2024 [May 23rd, 2024]
- First foundation installed for Dominion Energy's massive CVOW offshore windfarm - Riviera Maritime Media - May 23rd, 2024 [May 23rd, 2024]
- Perenco Unit Makes First Discovery Offshore DRC in 30 Years - Rigzone News - May 23rd, 2024 [May 23rd, 2024]
- Rovco wins survey work on 1.5GW Outer Dowsing offshore wind farm - Splash247 - Splash 247 - May 23rd, 2024 [May 23rd, 2024]
- F.lli Righini Delivers to Heerema Marine Contractors World-First Lifting and Upending Tools for the EnBW He Dreiht ... - Offshore WIND - May 23rd, 2024 [May 23rd, 2024]
- DeepOcean performs first-ever subsea dredging operations remotely from shore - Offshore Energy - May 23rd, 2024 [May 23rd, 2024]
- Windar and Polish City Strengthen Ties for New Offshore Tower Facility - Offshore WIND - May 23rd, 2024 [May 23rd, 2024]
- An up-close look at Americas first major offshore wind farm - Eyewitness News 3 - May 23rd, 2024 [May 23rd, 2024]
- MaineDOT Applies for Grant to Build Offshore Wind Port On Sears Isl. - Construction Equipment Guide - May 23rd, 2024 [May 23rd, 2024]
- Offshore wind industry targeted in latest lawsuits by NJ towns - Asbury Park Press - May 23rd, 2024 [May 23rd, 2024]
- US Competition Selects Finalists in Floating Offshore Wind Technologies - The Maritime Executive - May 23rd, 2024 [May 23rd, 2024]
- KNOT Offshore Partners not worried by growing shuttle tanker orderbook - TradeWinds - May 23rd, 2024 [May 23rd, 2024]
- GDG and ABAN Power to develop offshore wind in Asia-Pacific - Power Technology - May 23rd, 2024 [May 23rd, 2024]
- Jailton Almeida vs. Alexander Romanov UFC 302 Offshore Betting Odds, Preview, Picks - The Latest Sports Betting News - OffshoreSportsbooks.com - May 23rd, 2024 [May 23rd, 2024]
- Offshore Wind Turbine Market Valuation USD 39.2 billion | Europe Dominate by UK, Ireland, Belgium, Spain, - EIN News - May 23rd, 2024 [May 23rd, 2024]
- Guyanas economy surges on offshore success in prolific Stabroek block, EIA reports - EnerCom Inc. - May 23rd, 2024 [May 23rd, 2024]
- BASF to Buy Stake in German Offshore Wind Farms From Vattenfall -- Update - MarketWatch - April 22nd, 2024 [April 22nd, 2024]
- Denmark Launches Massive Offshore Wind Auction | Offshore Wind - Offshore WIND - April 22nd, 2024 [April 22nd, 2024]
- rsted and OEG Renewables Form Offshore Wind Pact in US | Offshore Wind - Offshore WIND - April 22nd, 2024 [April 22nd, 2024]
- Vestas and Maersk team up for South Korean offshore wind - Recharge - April 22nd, 2024 [April 22nd, 2024]
- Denmark's offshore wind parks currently generate 2.7 gigawatts of electricity - The Mountaineer - April 22nd, 2024 [April 22nd, 2024]
- rsted Buys Sunrise Wind Stake from Eversource - Offshore WIND - April 22nd, 2024 [April 22nd, 2024]
- 'More non-turbine challenges' | GE hits back in New York round 3 offshore wind demise - Recharge - April 22nd, 2024 [April 22nd, 2024]
- 'Heart-breaking': Refugees once detained offshore by Australia warn the UK government not to push through its ... - The Albany Herald - April 22nd, 2024 [April 22nd, 2024]
- Hearing scheduled this week on bill to advance offshore wind - delawarebusinessnow.com - April 22nd, 2024 [April 22nd, 2024]
- Aker BP begins production from Hanz field offshore Norway - Offshore Technology - April 22nd, 2024 [April 22nd, 2024]
- Denmark launches its biggest offshore wind farm tender - The Caledonian-Record - April 22nd, 2024 [April 22nd, 2024]
- Vestas and Maersk to Build Offshore Wind Hub in South Korea | Offshore Wind - Offshore WIND - April 22nd, 2024 [April 22nd, 2024]
- U.S. Navy To Convert Oil Rigs Into Offshore Military Bases To Counter China In The Pacific - Marine Insight - April 22nd, 2024 [April 22nd, 2024]
- BASF seals deal to buy into gigascale Vattenfall offshore wind to power chemicals complex - Recharge - April 22nd, 2024 [April 22nd, 2024]
- First Moray West 14.7MW Offshore Wind Turbine Comes Up - Offshore Engineer - April 22nd, 2024 [April 22nd, 2024]
- NYSERDA concludes New York's third offshore wind solicitation without final awards - 4C Offshore - April 22nd, 2024 [April 22nd, 2024]
- Galp Energia says Namibia offshore field could contain 10B barrels of oil - Seeking Alpha - April 22nd, 2024 [April 22nd, 2024]
- Framework Agreement signed with rsted in the US - 4C Offshore - April 22nd, 2024 [April 22nd, 2024]
- A submerged concern: offshore wind cables - Martha's Vineyard Times - April 22nd, 2024 [April 22nd, 2024]
- Possible human smuggling operation thwarted offshore in South Florida - cw34.com - April 22nd, 2024 [April 22nd, 2024]