APPEA urges tax reform to boost Aussie gas production

The Australian Petroleum Production & Exploration Association (APPEA) has released a report proposing widespread tax reform to meet the country's substantial potential as a gas producer.

Rick Wilkinson
OGJ Correspondent

ADELAIDE, Apr. 17 -- The Australian Petroleum Production & Exploration Association (APPEA) has released a report proposing widespread tax reform to meet the country's substantial potential as a gas producer.

The Platform for Prosperity report outlines 64 options designed to boost the Australian petroleum activity, including a 175% investment allowance for explorers in frontier areas.

APPEA proposes a 5-year depreciation allowance that initially would cost the Australian government $500 million (Aus.) in revenue for a two-train LNG project but would enable it to reap $4.5 billion (Aus.) in tax and royalties over the 27-year project life.

APPEA believes this is key to unlocking the country's vast potential for gas resource development and exports. In building LNG plants to offset the country's massive and growing trade deficit in petroleum products, Australia is struggling to compete against Middle East suppliers having lower production and development costs.

APPEA suggests a review of legislation for petroleum activities across all jurisdictions. The association says the length and complexity of the approvals process contributes to international perceptions of Australia as being a difficult place to invest in oil and gas exploration.

The association wants to remove tax and subsidy-related distortions from the domestic gas market, as well, saying Victorian gas is taxed at 4-13 times/gigajoule compared with brown coal, for example, a measure that distorts the market for gas in electric power generation.

APPEA also supports a carbon-pricing mechanism, subject to a number of conditions.

The report is the culmination of 18 months of analysis by the industry in consultation with state and federal governments.

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