THE FISCAL SETTINGS THAT ARE IMPORTANT TO PETROLEUM EXPLORATION AND DEVELOPMENT IN AUSTRALIA

Abstract

A fiscal regime must reflect the underlying characteristics of the petroleum industry. Australia’s fiscal settings do not sufficiently reflect the current and future characteristics of the industry, particularly frontier deepwater exploration activity. The fiscal system can encourage greater exploration by providing more immediate access to tax benefits for exploration for all taxpayers, adjustment of the PRRT augmentation rules to better reflect time lags and improving development economics for high risk projects. Competing international regimes exhibit a greater flexibility of fiscal terms required to attract investment. Common petroleum industry arrangements, such as farm-ins should be free from any tax uncertainty. Tax legislation should be amended on a timely basis to correct technical anomalies or uncertainties.