APPEA: gas industry to contribute $16.2 billion to State and Federal revenue in 2023

Under pressure from government and the public over what has been perceived to be low financial returns to federal and state coffers, the petroleum industry has hit back with new research which has estimated that Australian governments will collect $100 billion in tax from gas exports over the coming two decades.

Speaking at the annual Australian Petroleum Production & Exploration Association (APPEA) Conference, the association’s chair Meg O’Neill told a packed Adelaide audience that the gas industry is set to contribute $16.2 billion to state and federal revenue pools in 2023 alone.

A new APPEA commissioned report prepared by leading global commodity analyst firm Wood Mackenzie found that Australian LNG projects between 2014 and 2017 are now earning and paying substantial levels of corporate taxation.

Wood Mackenzie’s “APPEA – LNG Taxation Estimates and Review” study also reported that US$310 billion has been invested by industry in Australian LNG projects to date.

Government announces changes to petroleum resource rent tax

Ms O’Neill said the estimated government windfall unlocked in the report is related to items such as corporate income tax, Petroleum Resource Rent Tax (PRRT), state royalties and excise.

“Changes to PRRT that were announced by the Federal Government last week, in the budget, will see our industry contribute an additional $2.4 billion over the forward estimates,” she told the audience.

While controversy reigns over the recent updates to the PRRT rate, the APPEA chair said the industry welcomed the certainty that the Government’s announcement offers after many years of review.

PRRT is a tax generally on profits generated from the sale of marketable petroleum commodities (MPCs).

It was initially applied to specific to offshore petroleum projects since 1987 and has undergone a range of changes since then.

However, the Federal Treasury’s recently revealed proposed changes are considered the most significant to date.

The changes include the Government’s decision to limit deductible expenditure to the value of 90 per cent of PRRT assessable receipts in respect of each project in the relevant income year.

Future Gas Strategy

Ms O’Neill also told attendees that the industry welcomed the Federal Government’s recent announcement of the development of the Future Gas Strategy.

“In my view, this is a great opportunity to outline the ongoing role of gas in the energy transition,” she said.

“The Strategy will guide a realistic pathway for Australia into the future, whereby responsible resource development is understood and can continue.”

“The Strategy will also send a strong signal and an important signal to our regional partners that Australia is open for business.”

Federal Minister for Resources and Minister for Northern Australia, Madeleine King, told the APPEA audience that the Future Gas Strategy is part of the Government’s commitment to Australia’s energy system.

The government believes it make Australia’s energy network cleaner, cheaper and more reliable.

“The Government is committed to pursuing an economic reform agenda that delivers for the Australian people, and I understand this has not been easy for the sector.”

The Minister said the proposed Future Gas Strategy will create a framework that balances energy security with affordability and investment certainty.