Australia spurs frontier exploration with enhanced incentive
The Australian government introduced a taxation incentive to encourage exploration of Australia's remote offshore areas. Announced jointly by Pete Costello, treasurer, and Ian Macfarlane, minister for Industry, Tourism and Resources, the measure allows an immediate increase to 150% on petroleum resource rent tax (PRRT) deductions for exploration expenditures in designated offshore frontier areas.
Australia's government projects that in the next ten years oil production will begin to decline lowering Australia's self-sufficiency from 90% to 40%.
The 150% increase applies to pre-appraisal exploration expenditure in the initial term of the exploration permit granted for a designated area. Increased expenditures will also retain access to the transferability and annual increase provisions of the PRRT.
Australia has 40 offshore basins that have petroleum potential, but half remain unexplored due to the cost and risk of frontier exploration. Several blocks are designated frontier areas for this new incentive:
• T04-5, off the west coast of Tasmania near Port Davey in the Sorell Basin
• W04-2 and W04-4, over 400 km west of Karratha in the Exmouth Plateau
• W04-15 and W04-16, around 70 km west of Shark Bay in the Houtman Sub-basin, part of the Northern Perth Basin
• NT04-3, about 300 km north of Darwin in the Bonaparte Basin, Timor Sea.
The PRRT measure lowers the cost of petroleum exploration in frontier areas, providing an incentive to explore Australia's remote offshore areas and increasing the probability of discovering a new oil province. The measure applies to the annual offshore acreage releases for 2004 to 2008.
Under the measure, the Minister for Industry, Tourism and Resources may allocate up to 20% of each year's offshore petroleum exploration acreage as designated frontier areas. Designated areas will be more than 100 km from an existing commercialized oil discovery and will not be adjacent to an area designated in the previous year's acreage release.
The 2004 offshore petroleum exploration areas were announced on 29 March 2004 and all of these areas remain open for bidding until 31 March 2005.
For more information contact the treasurer's Office: David Alexander 02-6277-7340, Minister Macfarlane's Office: Kirsty Boazman 02-6277-7580, or website: www.industry.gov.au/petexp.
05-12-04