Australia says to review petroleum retention leases

DARWIN, July 17 (Reuters) - Australia will review its petroleum retention leases and plans to strip companies of their leases should they not develop a field which the government has found to be commercially viable, a government official said on Thursday.

Martin Ferguson, Minister of Resources and Energy, said the government would conduct a "rigorous" series of mid-term assessments on the commerciality of existing retention leases to assess the fields' commercial viability in the current market environment.

Should the ministry decide a field is commercially viable, the firm holding the retention license would have 12 months to decide whether it would develop the project. During this period, companies can also propose alternative development options.

"They will have 12 months to decide if they are in it or if they are going to walk away from it. We're going to tell them to either use it or lose it," Ferguson told reporters on the sidelines of an oil and gas conference in the northern Australian city of Darwin.

When asked if there were specific fields which the government was eyeing, Ferguson said his ministry had been asking BHP Billiton (BHP.AX) (BLT.L) to develop its Macedon gas field off Western Australia.

BHP had said in June it was considering developing the Macedon field for the local market. Macedon, discovered in 1992, is a reservoir estimated to contain 1.2 trillion cubic feet (tcf) of gas.

Ferguson said the ministry would assess the commercial viability of a project based on the estimated cost development and current market conditions.

The existing legislation allows petroleum retention licences to be extended for rolling periods of five years. (Reporting by Fayen Wong; Editing by Ben Tan)