(Adds ExxonMobil, Shell comments)
By Sonali Paul
MELBOURNE Nov 30 Australia is targeting the oil
and gas industry for a tax review ahead of next year's budget,
in a push to boost revenue after a sharp slump over the past
three years and collect more from multinational giants.
Treasurer Scott Morrison said on Wednesday that takings from
the nation's petroleum resource rent tax had halved to A$800
million ($600 million) since 2013, while revenue from crude oil
excise taxes had more than halved due to a collapse in oil and
gas prices and falling output.
"This is about ensuring sustainability and effectiveness and
efficiency of our tax system. It is actually not primarily about
revenue. It is important these companies pay their fair share
when it comes to these issues," Morrison told reporters.
The drive comes as Australia is not expected to reap as much
as hoped from a more than $200 billion investment spree over the
past few years that will make it the world's biggest exporter of
liquefied natural gas (LNG) by around 2019.
That is because the petroleum resource rent tax (PRRT) is
designed to collect revenue after projects have recouped their
investment and are profitable, which will take longer than
expected in a world of weak oil and gas prices.
"LNG projects, unlike conventional oil and gas projects,
involve billions of dollars of up-front investment. It will take
10 or more years to recover that investment before making a
return," Shell Australia Chairman Andrew Smith said in an
Canberra has already been tackling multinationals over
clever accounting and the use of trading operations offshore to
lower their tax exposure in Australia, and Morrison said the oil
and gas focus is part of that effort.
Australia last targeted the resources industry in 2010, when
then Labor Prime Minister Kevin Rudd proposed a super profits
tax at the height of the mining boom which was eventually
heavily watered down after a bitter fight with miners and
contributed to his downfall.
The oil and gas tax review follows a recent audit, which
found that Australia's biggest petroleum operation, the North
West Shelf joint venture, whose owners include Chevron Corp
and Royal Dutch Shell, may have underpaid
royalties by taking ineligible deductions.
Morrison said deduction calculations will be examined as
part of the review.
INDUSTRY BACKS REVIEW
The oil and gas industry said it would cooperate with the
review, in contrast with the mining industry in 2010, saying the
petroleum resource rent tax was working as intended.
ExxonMobil said it had paid over A$12 billion in PRRT since
"We welcome the review. This will give us another
opportunity to talk about our contribution," ExxonMobil
Australia Chairman Richard Owen said at an event in Sydney.
The Australian Petroleum Production and Exploration
Association said the industry had paid more than A$5 billion in
taxes in 2015, despite recording its first ever net loss.
"The continued payment of taxes at a time when the industry
is under severe pressure debunks critics' suggestions that the
industry is not somehow paying its way," APPEA Chief Executive
Malcolm Roberts said in a statement.
Oil and gas company shares fell on Wednesday along with oil
prices, as OPEC looked like it would fail to agree on a
production cut. Woodside fell 2 percent, Santos
dropped 3.5 percent, while Beach Energy slid
($1 = 1.3392 Australian dollars)
(Reporting by Sonali Paul; Editing by Richard Pullin)