Martin Ferguson (Batman, Australian Labor Party, Minister for Resources and Energy) Share this | Hansard source

in reply—I thank the honourable members who have contributed to the debate on the Offshore Petroleum Amendment (Datum) Bill 2008. As I said when I introduced the legislation into the House, the purpose of the bill is to make very minor technical amendments to the datum provisions included in the Offshore Petroleum Act 2006. The bill will give effect to the policy intention for the Offshore Petroleum (Miscellaneous Measures) Act 2008, ensuring the correct use of the datums AGD66 and GDA94. The bill will remove uncertainty about title boundaries for petroleum titles, which is very important; ensure alignment between existing and future titles; and facilitate the award of new exploration permits and the release of new exploration acreage.

The bill will also correct an error resulting from a technical oversight in the Offshore Petroleum Amendment (Miscellaneous Measures) Act 2008 which inadvertently replaced all references to the Australian geodetic datum, or AGD66, with the geocentric datum of Australia, or GDA94. The amendments in the Offshore Petroleum Amendment (Miscellaneous Measures) Act 2008 commenced on 1 July 2008.

To explain this technical matter further, a ‘datum’ is a mathematical surface on which a mapping and coordinate system is based. The Australian geodetic datum, or AGD66, was based on a mathematical surface of the earth which was designed to fit the Australian region. I am sure the member for Mallee, who is in the chamber and is an engineer, understands the nature of this debate. While this has been a good datum for local use, it has an origin approximately 200 metres offset from the earth’s centre of mass.

The advent of global positioning systems has justified the adoption of an international geocentric, or earth centred, datum. This is the Geocentric Datum of Australia 1994, or GDA94. You learn something new every day! Under the recently repealed Petroleum (Submerged Lands) Act 1967, the graticular sections and blocks on which petroleum titles are based had been determined by reference to AGD66. The responsibility of government was therefore to provide certainty for petroleum titleholders, ensure that title boundaries do not change and maintain alignment between existing titles and new titles, so the Offshore Petroleum Act 2006 was necessary. That act, which replaced the Petroleum (Submerged Lands) Act 1967 and came into effect from 1 July 2008, allowed continued determination of graticular sections and blocks by reference to AGD66.

To more accurately reflect the global positioning system which is increasingly used for surveying and navigation, the points, lines and areas in a petroleum title have been described since 2002 using GDA94. However, the grid on the earth’s surface used to determine title areas—that is, AGD66—has to remain unchanged. Although the advent of global positioning systems justifies the adoption of an international geocentric datum, the Offshore Petroleum Act still needs to refer to AGD66 for the purposes of determining the position of graticular sections or blocks and refer to GDA94 for certain other purposes, including describing coordinates of a point in a title. If graticular sections or blocks are determined by reference to GDA94, as the amended Offshore Petroleum Act currently states, the grid used to determine the position of the titles will move approximately 200 metres in a north-easterly direction from a grid that refers to AGD66. This was not the policy intention and would cause concern and uncertainty for industry if not corrected. For example, if not corrected the situation may create uncertainty for existing titles and risk future titles moving out of alignment with existing titles.

It is proposed that the amendments in schedule 1 of this bill have retrospective effect from 1 July 2008 to provide the following benefits to industry: firstly, to remove uncertainty about title boundaries for petroleum titles; secondly, to ensure alignment between existing and future titles; and, finally, to facilitate the awarding of new exploration permits and the release of new exploration acreage. There are no adverse effects on industry due to retrospectivity. Industry welcomes it.

This is a technical but nonetheless important and urgent amendment bill. Until the datum provisions in the Offshore Petroleum Act are amended, it is necessary to suspend the release of new exploration areas and the grant of new and renewed petroleum titles. Early amendment of the Offshore Petroleum Act is required to enable offers of exploration permits to successful applicants over areas for which bidding closed on 18 April 2008 and re-release in October 2008 of areas that received no bids.

I express the government’s appreciation to those members who have contributed to this debate. It gave them the opportunity not only to talk about the technical nature of the bill before the House but also to appropriately focus on the importance of the oil and gas industry to Australia, both in terms of domestic energy security and also in the context of us being a major exporter of energy supplies. I specifically refer to the contributions by the member for Groom, the former Minister for Industry, Tourism and Resources, and the members for Corio, Werriwa and Maribyrnong.

Whilst I appreciate the member for Groom’s support for the legislation, I will make a few concluding remarks with respect to a number of other issues that he raised during the course of the debate. Firstly, with respect to his remarks concerning the government’s commitment to develop a carbon pollution reduction scheme and the uncertainty he believes it has created in the oil and gas industry, I simply say that the government is involved, as it is a green paper process, in genuine consultation with representatives of the oil and gas industry, both at a peak council level and at an individual company level.

We are about making sure that the Carbon Pollution Reduction Scheme not only assists industry in reducing greenhouse gas emissions but in a measured way also maintains a capacity for the industry to grow and expand in Australia, thereby creating additional export opportunities, jobs and training opportunities for Australia. We understand there are concerns, and representatives of the industry participated in a day of consultations that I undertook with my department and representatives of other ministerial offices and departments in Canberra on Friday last.

In going to the issue of the member’s more extensive remarks about the government’s decision to remove the condensate excise exemption, can I say the government appreciates that, yes, it is fair enough to have incentives to actually get major resource projects up and running in an initial instance. But I think, in the context of the national interest, the Australian community also accepts that once such major projects are up and running the Australian people are entitled to get their fair value from their resources. The government makes no apologies for reviewing the condensate excise on a project that has been in place for 24 long years and has produced a great incentive to the development of the North West Shelf. It is now a mature project in the context of oil and gas prices far higher than those in the original time frame for the development of the project 24 years ago. It has also been a highly profitable project for those companies which saw Australia as a good place to invest. The record shows that their investment has actually produced considerable financial benefit not only to Australia but also to those companies.

For the information of the chamber, this condensate exemption has represented a major gain for one project. For example, over the last five years it has been to the tune of at least $1.5 billion. We believe that, given those considerable opportunities for the North West Shelf Venture partners, the Australian community is entitled to have this condensate excise reviewed so as to guarantee that it gets a fair share of the proceeds of the commodities boom. I also indicate to the chamber that the North West Shelf has also had a major competitive advantage over all other gas projects in Australia that are struggling to get off the ground. This is important to me, because when you look back over 24 years you see that we have only got two oil and gas projects to market. I am not accepting that that is good enough. Our responsibility is to create opportunities for other investors to bring projects such as Gorgon, Browse and Sunrise to fruition. Our government is going to level up the playing field to get more competition in the market and more investment in Australia’s gas resources for our future prosperity and in the nation’s best interests.

In terms of a factual consideration of this matter—and I ask that the member for Groom take this on board—the tax is a tax on condensate. Condensate is not gas; it is like crude oil. It is not a tax on natural gas. I say this because there has been some press speculation—I suppose in the context of the state election in Western Australia that will be held on Saturday—about a claim by Woodside, one of the North West Shelf venture partners, that domestic gas prices will increase as a result of this tax. From the government’s point of view, there is no good reason why domestic gas prices should increase.

More importantly, I would remind Woodside and others involved in the project that I did not see any offer of lower gas prices to customers when the crude oil excise rate was cut in 2001. That has produced significant gains of about half a billion dollars, although if you actually examine the Hansard of the relevant debate in 2001 you see that the then government—represented by the then member for Leichhardt and former Parliamentary Secretary to the Minister for Industry, Science and Resources, Mr Entsch—indicated that it estimated that the cut would produce benefits to the North West Shelf partners of about $75 million over 10 years, so I think they have done considerably well out of that decision by the previous government to actually reduce tax with respect to this project. I cannot understand why these venture partners would suggest that if one concession were reduced prices should go up. Alternatively, when tax on their project was considerably reduced there was no indication of them reducing the price of gas for domestic or international partners.

This is a highly technical debate but it appropriately gave members an opportunity to talk about an industry that is exceptionally important to Australia in export opportunities, an industry that is also going to grow in importance in the Asian region because countries such as Korea, China and Japan are looking to Australia for energy security. They regard the LNG industry as a clean energy industry and they are looking for us to further develop the industry and to bring on projects such as Gorgon, Browse and Sunrise. As I said recently during a visit to China, Australia is open for business. We simply say to those countries interested in investing in Australia that projects such as the North West Shelf clearly indicate that Australia is a good place to do business. If any of those companies are interested in further investment in Australia, and also in applying for our retention leases, they should consult the department and my office because we will be doing everything possible to facilitate such investment.

I am also pleased to say that, in the context of the development of the Carbon Pollution Reduction Scheme and the detailed discussions held with 50 to 60 companies here in Canberra last Friday, not one company argued against the introduction of such a scheme. The debate was about the nature of the scheme and also international considerations. I simply remind the House that you would not have got that commitment from industry two to three years ago. They understand that, from the Australian government’s point of view, the time has come for us to act as a community but also to have regard for international developments in the context of developing such a scheme.

In conclusion, I note that the Notice Paper provides for a discussion of the Standing Committee on Primary Industries and Resources report entitled Down under: greenhouse gas storage. I welcome that debate in the Main Committee. The primary industries and resources committee did an exceptionally good job in the consideration and preparation of that report. The Main Committee presents an opportunity for members to contribute to what is going to be a key debate for Australia in the context of developing the Carbon Pollution Reduction Scheme.

We will see in the future a growth in renewables, but Australia, like the rest of the world, will remain a heavily fossil fuel dependent community and, as part of that, we have to make sure that we invest in technology which will enable us to extract carbon dioxide and safely store it, therefore guaranteeing that we maintain fossil fuel energy opportunities in Australia which are low in emissions. That is not only important to Australia but also important to the global community because not only are we a nation that is heavily dependent on coal-fired power stations but we are a major exporter of coal, and the world in which we live, especially the Asian region, is looking to us to provide not only coal but also LNG, uranium and a range of other energy sources to power their economies and to facilitate economic growth in countries such as China and India. I thank the members for their contributions to the debate and commend the bill to the House.

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