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INVESTING IN THE AUSTRALIAN PETROLEUM INDUSTRY

The information contained in this publication is intended as an introduction only, and should not be relied upon in place of detailed legal advice. Some information has been obtained from external sources, and Corrs cannot guarantee the accuracy or currency of any such information.

The information contained in this publication was current as at May 2014.

page i

Foreword ................................................................................................................................ 1

Overview ................................................................................................................................ 2

Introducing Corrs Chambers Westgarth .................................................................... 5

The Australian Economy, Legal System and Government ................................................................................................. 10

The Australian Petroleum Industry ............................................................................ 12

Australian CSG to LNG Projects ................................................................................... 25

Investment Structures .................................................................................................... 28

Current Hot Topics ............................................................................................................ 32

Key Legal Considerations when Buying or Developing Australian Oil and Gas Projects ............................................................ 37

Royalties and Taxation .................................................................................................... 53

Employment Relations and Skilled Labour ............................................................. 59

Due Diligence on Australian Oil and Gas Projects ................................................ 63

Corrs team contacts ......................................................................................................... 66

Glossary of terms .............................................................................................................. 69

Footnotes ............................................................................................................................. 71

CONTENTS

Investing in the Australian Petroleum Industry

FOREWORD

The petroleum industry has always been characterised by its unique blend of risk and opportunity. It is an industry of pioneers and innovators, as well as visionaries and dealmakers. But the Australian resources sector is facing a new era, one marked by regulation that comes with true globalisation of the industry. The market’s focus is on major oil and gas opportunities with particular emphasis on unconventional gas and LNG, and those seeking to take advantage must learn to operate in this increasingly regulated international market.

Business success therefore will be underpinned by a strategy that considers the structure and limitations of global regulations, agreements and policies, combined with the right connections with stakeholders.

Corrs Chambers Westgarth offers a deep understanding of the wider international and political issues affecting cross-border business. As a premium independent law firm, we are able to leverage our global connections with policy makers, government and trade agencies to help our clients manage complex environments. I am proud to be able

to say that Corrs is known for its strong international alliances and is widely represented in national and global business affairs. We are part of the debate on the country’s position on and approach to topics such as trade and investment, global governance and anti-corruption.

Opportunity in the Asia-Pacific region and globally will continue to grow. Australia is well placed to make the most of this evolving business environment.

Corrs’ Energy, Resources and Projects team is pleased to be publishing Investing in the Australian

Petroleum Industry. This publication is a useful source for those interested or considering strategic investment in a fast-growing industry.

We wish you all the best with your endeavours.

Regards,

JOHN W.H DENTON

Partner and CEOCorrs Chambers Westgarth

John W.H. Denton is Partner and CEO of Corrs Chambers Westgarth. He is also a Prime Ministerial representative on the APEC Business Advisory Council; Co-Chair of ABAC’s Finance and Economics Working Group and Chair of the BCA Global Engagement Taskforce.

He is a member of the B20, the business reference group of the G20 and the Australian B20 leadership group. He was an external adviser on the Federal Government advisory panel that oversaw the development of the ‘Australia in the Asian Century’ White Paper.


OVERVIEW

The energy and resources sector has moved to centre stage with regard to Australia’s economy and competitiveness on an international stage. Australia’s upstream oil and gas industry has entered a period of unprecedented growth and transformation, with more than $200 billion currently being invested in oil and gas projects including seven major LNG projects.1

Based solely on projects currently committed or under construction, the industry will bolster Australia’s economy, contributing approximately A$28 billion or 2.5 per cent per year to GDP and billions of dollars in taxation revenue.2

With a stable political, legal and economic environment, a highly

skilled workforce and a welcoming attitude to foreign investment, Australia is a favoured destination for foreign investors.

Major developments in the petroleum industry in Australia have taken the spotlight in recent years, provoking great interest from foreign investors. Over the next few years,

Australia is set to become one of the world’s largest exporters of LNG.

This publication provides background information in relation to the Australian oil and gas industry and explores key legal considerations for investing in or developing an oil and gas project in Australia.

INTRODUCING CORRS CHAMBERS WESTGARTH

Corrs Chambers Westgarth (Corrs) is a world class law firm based in Australia and a firm of choice for foreign companies investing in the oil and gas industry in Australia.

Our strong partnering relationships throughout the Asia-Pacific region and globally means we are ideally placed to support clients whose businesses extend nationally and internationally.

We advise major organisations on the matters most important to them, bridging the gap between business issues and legal practice.

Corrs is consistently involved in high profile work for both domestic and international clients. A number of the ASX top

100 listed companies, numerous Fortune 500 companies and some of the world’s largest organisations choose Corrs as a legal provider.

Corrs’ lawyers are considered to be world class in their fields. We are proud of our reputation for delivering results by providing innovative, multi-disciplinary teams who understand clients’ objectives and execute legal services in a competitive and commercial manner.


CORRS AND THE PETROLEUM INDUSTRY

Corrs’ Energy, Resources and Projects team is made up of more than 65 lawyers located in Brisbane, Perth, Sydney and Melbourne, who specialise in this area and who between them have an unsurpassed depth of experience in the oil and gas industry.

OUR CLIENTSOur experience has been gained from many years of close involvement with leading Australian, as well as private and Government-owned foreign companies in relation to their interests in the Australian energy sector including:

• BP Australia

• Enertrade

• Exoma Energy

• Inpex

• QGC

• Woodside

• Senex Energy

• Bridgeport Energy

• Tri Star Petroleum

• APPEA

• Drillsearch Energy

• Tokyo Gas

• Texas Crude Energy Inc

• Chartwell Energy (U.S.A.)

• Magellan (U.S.A.)

• Shell (International)

• Energy World Corporation

SERVICES TO THE PETROLEUM INDUSTRYCorrs is able to offer a team of leading lawyers who have an intimate knowledge of all aspects of the petroleum industry and can advise on:

• acquisitions and disposals

• joint ventures

• finance

• major construction and procurement contracts, including EPC contracts, drilling contracts and floating production storage and offloading (FPSO) contracts

• gas supply, gas balancing and gas lifting arrangements

• access arrangements and arrangements for sharing of facilities and infrastructure

• project approvals, including petroleum titles, environmental approvals and maritime approvals

• land access and property

• workplace relations

• contract disputes

Corrs has un-matched expertise across the project lifecycle from exploration, appraisal and pre-feasibility to commercial operation.

Upstream

Corrs has a strong track record advising national and international

clients on all aspects of exploration and production development, including acquisitions, bidding agreements, exploration agreements, cost sharing agreements, drilling contracts, concessions, licences and revenue and production sharing arrangements, joint operating agreements, unitisation agreements, construction contracts, FPSO developments, balancing and lifting agreements, tie in agreements and marketing agreements.

Midstream

Our team has been involved in advising clients on access to the land on which collection and transmission facilities are located (including the acquisition of easements), approvals and licensing, construction agreements and operation and maintenance agreements, shipping and transportation agreements and developing and advising on open access and negotiated access regimes.

Downstream

Corrs also advises clients on processing, treatment and liquefaction facility developments, refining, tolling agreements, shared facility agreements, gas and feedstock supply agreements, sale and purchase agreements, trading agreements, terminal use agreements and advising on shipping, marketing and distribution generally.


PROVEN RESULTS IN THE PETROLEUM INDUSTRY

Queensland Curtis LNG ProjectActing for QGC in relation to its US$20.4 billion Queensland Curtis LNG (QCLNG) Project, the world’s first CSG to LNG project. Corrs has advised on various aspects of the project from procurement strategy, tendering process, contract negotiation and administration; all aspects of environmental impact assessment including Federal and State approvals, and advising on land access and other tenure issues.

Ichthys LNG ProjectAdvising Inpex in relation to Australia’s biggest resources project, the US$34 billion Ichthys gas field development. Our team is advising on this market-transforming LNG project in relation to a wide range of strategic, project planning, legal and regulatory issues as well as in its construction and procurement activities. We are also assisting in the negotiation of numerous major contract packages including the Onshore EPC Contract and the Offshore EPC Contract.

WoodsideAdvising Woodside on its financing arrangements over the last three years. This has included acting as Australian counsel for Woodside in the JBIC Facility, its 144A capital markets issue, and its bilateral and syndicated financing arrangements. Corrs has also advised Woodside on successfully executing a US$1.1 billion syndicated loan facility involving 26 banks (Australian and international), one of four such financings in the course of 18 months with a total value of US$4.3 billion.

Pluto LNG ProjectAdvised Woodside on the expansion of the Pluto LNG Project in Western Australia, including project planning and structure, equity sale, LNG SPA, gas tolling arrangements, shipping arrangements, the addition of Trains 2 and 3 and third party gas supply arrangements.

BP AustraliaActing for BP in relation to its investment in the Io Field (located offshore Western Australia) including advice on the underlying joint operating agreements and unitisation agreements.

Drillsearch Energy Limited Advising Drillsearch on its joint venture with Santos to accelerate Western Cooper Wet Gas commercialisation. Under the arrangements Santos will acquire a 60% interest in the Western Wet Gas Project with a commitment to fund the work program valued by Drillsearch at A$100 – 120 million.

Blacktip gas projectActing for the operator of the Blacktip gas discovery (northern Australia) including the acquisition of equity, farmout of equity, joint operating agreement, sole risk issues, Petroleum Resource Rent Tax and gas supply agreement.

Senex Energy Limited Cooper-Eromanga Basin Farm-out Advised Senex Energy on two farm-out agreements with Origin Energy to evaluate tight gas sands in key areas of South Australia’s southern Cooper-Eromanga Basin. The work program is to take place in two stages totalling A$185 million, with an additional work program expenditure of up to A$67 million.

Sunshine Gas Limited Conducted due diligence in respect of petroleum tenements and upstream arrangements in relation to the successful takeover of Sunshine Gas Limited by QGC.

PNG LNG Project Acting for the Government of Papua New Guinea on the A$16 billion development of upstream, midstream and LNG liquefaction facilities in PNG.

Pure Energy Resources Limited Advised BG Group on its successful takeover of Pure Energy Resources Limited.

Sunrise Gas Project (Timor Sea)Acted for the Operator, including in relation to unitisation arrangements, operating arrangements, proposed domestic gas project, proposed pipeline infrastructure including construction and tariffing arrangements, proposed floating LNG project, proposed onshore LNG project, environmental approvals, Petroleum Resource Rent Tax, regulatory issues and joint venture issues.

Tap Oil, Harriet Joint Venture (Carnarvon Basin)Advising Tap Oil on the sale of its interest in the Harriet Joint Venture.


RECENT RECOGNITION

Our team members are recognised as leaders in the oil and gas industry. In fact, a number of Corrs’ partners are ranked amongst the best energy lawyers in the world, as evidenced by some of our recent independent industry awards.

BEST LAWYERS • Michael MacGinley - “2014 Brisbane Oil & Gas Lawyer of the Year”, “Best Lawyer - Energy,

Mining, Oil & Gas and Natural Resources”, 2009-2014

• Paul Careless – “Best Lawyer – Oil & Gas, and Natural Resources”, 2012-2014

• Peter Jarosek – “Best Lawyer – Energy, Oil & Gas, and Natural Resources”, 2008-2014

• John Kelly – “Best Lawyer – Energy, Mining, Oil & Gas, and Natural Resources”, 2008-2014

• Bruce Adkins – “Best Lawyer – Energy, Mining, Oil & Gas and Natural Resources” 2013-2014

• Henry Prokuda – “Best Lawyer - Oil & Gas”, 2013-2014

• Peter Jarosek – “2012 Perth Oil & Gas Lawyer of the Year”

CHAMBERS GLOBALMichael MacGinley, Peter Jarosek, Paul Careless, Bruce Adkins and John Kelly recognised as “Leading Lawyers Energy and Natural Resources”, 2013-2014

GLOBAL 100 2013Law Firm of the Year 2013, Oil & Gas – Australia

WHO’S WHO LEGAL John Kelly - “Featured Expert - Mining and Oil & Gas”, 2012

Peter Jarosek - “Featured Expert - Mining and Oil & Gas”, 2012

ASIA PACIFIC LEGAL 500 Corrs had more leading individuals in Energy and Resources than any other Australian law firm, 2011-12

WHAT OUR CLIENTS AND LEGAL COMMENTATORS SAY ABOUT US

As demonstrated in the commentary provided by our clients as part of the independent industry awards programs, the advice and reputation of Corrs’ oil and gas team is highly esteemed.

John Kelly is a well-established practitioner with a primary focus on mining and LNG mandates. Clients enthuse: “He is one of those extremely senior practitioners with an enormous amount of experience in major projects.” Peter Jarosek is “one of the best oil and gas lawyers around, especially when it comes to transactional and operational work. He offers great industry knowledge and amazing drafting skills,” sources reveal. Michael MacGinley acts across the energy and natural resources arena and is particularly respected for handling commercial arrangements concerning major mining and utilities projects. Bruce Adkins excels at acquisition and project development matters. Clients note that he “has good technical knowledge and has done so many deals in the resources space that there can’t be a transaction structure he hasn’t seen.”Chambers Global – Energy & Natural Resources 2014

“A practice with a great depth of resources, a lot of experience across all aspects of the sector, and a very strong team behind it.”Special Counsel Paul Careless is “great – a very thorough practitioner.” He is notably active in the oil and gas sector, and advised QGC on its QCLNG project.Chambers Global – Energy & Natural Resources 2013

“Corrs Chambers Westgarth displays an increasing ability to punch above its weight in this practice area, a commercial approach to its work, and special expertise in the provision of legal advice to inbound investors ... Corrs’ work was excellent and seamless.”Chambers Asia Pacific Guide – Energy & Natural Resources 2012



THE AUSTRALIAN ECONOMY, LEGAL SYSTEM AND GOVERNMENT

ECONOMYAustralia has a strong and stable economy, based largely around traditional primary industries such as mineral and petroleum resources and agriculture, but with an increasing focus on information technology, tourism and education.Australia ranks 21st in the World Economic Forum’s ‘Global Competitiveness Report’ for 2013-14.3 The nation has an efficient and well-developed financial system (ranked 7th) and receives very good ratings for higher education and training (ranked 15th). Australia’s macroeconomic situation is also improving (ranked 25th).4 Relatively low unemployment, transparent public and private institutions, a strong resources industry, contained inflation and

prudent macroeconomic policy management also contribute to Australia’s stability and growth. In its recently released ‘World Economic Outlook Report’, the International Monetary Fund forecast Australia’s growth in 2014 to remain stable at 2.6%.5 This projection is above that of the forecast average of 2.2% for advanced economies6 and signifies Australia’s continuing resilience in the face of challenging global economic conditions. Australia has low barriers to trade and investment. It has a sound and practical structure of financial and corporate regulation which provides certainty for business and is open to investment without undue delay. Australia is also party to a number of Free Trade Agreements with

countries including the United States, Thailand, New Zealand, Singapore, Chile and, most recently, Malaysia. The Australia-China Free Trade Agreement is currently under negotiation with the 20th round of negotiations held in Canberra on 5-8 May 2014. The Australia-Korea Free Trade Agreement was signed on 8 April 2014 but is not yet operational. The successful conclusion of negotiations on the Japan Australia Economic Partnership Agreement was announced on 7 April 2014. Australia is also engaged in advanced negotiations with India to conclude a Comprehensive Economic Cooperation Agreement, as well as with Indonesia for a Comprehensive Economic Partnership Agreement.7

GOVERNMENT AND LEGAL SYSTEMThe Commonwealth of Australia is a federation of six States (New South Wales, Victoria, Queensland, South Australia, Western Australia and Tasmania), two internal Territories (the Northern Territory and the Australian Capital Territory) and a number of minor external Territories.A written Constitution divides power between the central Federal Parliament, located in Canberra in the Australian Capital Territory, and the eight State and Territory Parliaments. The Constitution gives the Federal Parliament legislative power over various areas relevant to foreign investment, including corporations, taxation, international and interstate trade and commerce, communications, banking, insurance, bankruptcy and insolvency, intellectual property, immigration and industrial disputes.

Each State has legislative power to make any laws that it wishes to make, except in relation to a few matters reserved to the Federal Parliament. Federal law prevails over State or Territory law to the extent of any inconsistency.Federal, State and Local Governments are democratically elected at general elections held every three or four years. These elections are contested by candidates from two major political parties (the Australian Labor Party and the Liberal / National Coalition) and several smaller parties and independent politicians.Any foreign investment proposal must comply with both Federal law and the law of the State or Territory in which the investment is located.There are two sources of law in Australia – statute law and common

law. Statute law is the body of written law enacted by the various levels of Government. Common law is the body of law created out of decisions of the various Federal, State and Territory courts.Each State has its own court system, consisting of a Supreme Court and a number of minor courts. The Federal Government has its own court system consisting of the High Court, the Federal Court, the Family Court and the Federal Magistrates Court. The High Court is the highest court of appeal in Australia, and it hears appeals (if permission is granted) from the Federal Court and the State Supreme Courts. In addition, there are numerous panels and tribunals administering particular areas of law, such as industrial relations and takeovers.


THE AUSTRALIAN PETROLEUM INDUSTRY

OIL AND GAS RESOURCES AND PRODUCTION

RESOURCES – CONVENTIONAL AND UNCONVENTIONALAustralia has vast gas resources with over 570 Tcf of identified resources.8 Australia’s gas resources include conventional gas resources and unconventional gas resources (such

as coal seam gas,9 tight gas and shale gas).

Most of Australia’s conventional gas resources are found in the giant Carnarvon, Browse and Bonaparte basins which are located in a geological region off the northwest coast of Australia known as the North West Shelf (see Figure 1).10

There are also conventional gas resources in south-west, south-east and central Australia.11

At the beginning of 2011, Australia’s economic and sub-economic demonstrated resources of conventional gas were estimated at 157 Tcf.13 These resources are located across 15 basins

Figure 1: Location of Australia’s gas resources and infrastructure 12


with 92% of the conventional gas resources situated in the North West Shelf.14 There is estimated to be an additional 10 Tcf of inferred conventional gas resources in recently discovered fields and fields not included as part of the economic or subeconomic demonstrated resources.15 At current production rates there are sufficient economic demonstrated reserves of conventional gas (103 Tcf) to last another 54 years.16

Australia also has significant unconventional gas resources with economic demonstrated resources of CSG at 32.6 Tcf, identified tight gas resources at around 20 Tcf and an estimated 396 Tcf of technically recoverable shale gas resources.17 The distribution of gas resources in 2035 is expected to shift as discoveries of conventional gas resources offshore plateau, CSG exploration and production continues to increase and new tight gas and shale gas resources are identified and developed.18

Australia has about 0.3% of world oil reserves.19 Australia has economic reserves of approximately 4.1 billion barrels of oil, comprised of 1 billion barrels crude oil, 2.1 billion barrels condensates and 1 billion barrels LPG.20

Three quarters of Australian liquids production is sourced from Commonwealth waters adjacent to Western Australia.21 Production from waters adjacent to Victoria accounts for the next highest share.22 Oil resources have also been identified in the Perth, Canning,

Amadeus, Cooper/Eromanga, Bowen/Surat, Otway, Bass and Gippsland basins.23 However, onshore resources, mostly found in the Cooper basin, account for only 5% of Australia’s oil resources.24

PRODUCTION – CONVENTIONAL AND UNCONVENTIONALConventional petroleum resources account for over 90% of Australia’s natural gas production and all of the oil production.25

Australia’s gas production has almost doubled since 1998, meeting growth in domestic and international market needs.26 In 2013, Western Australia was the largest producer of LNG (887.9 Mmcf) and conventional gas (384.1 Mmcf), while Queensland was the largest producer of CSG (230.1 Mmcf).27 Australian gas production is projected to reach 7.5 Tcf in 2034-35, with production from both conventional gas and CSG expected to rise.28 According to the International Energy Agency, natural gas production in Australia reached 1.6 Tcf in 2011 and has increased overall from nearly 1.2 Tcf in 2000 as a result of new developments.29

Although Australia’s crude oil and condensate production is predicted to increase from 366,000 bopd in 2012-2013 to 374,000 bopd in 2013-2014,30 Australia’s liquids production is forecast to trend downwards over the next two decades.31

EXPORTAustralia is a major exporter of LNG, with considerable potential for further development based on its significant natural gas resources.32 Australia’s LNG exports have been growing strongly, by about 10% on average per year.33 This is projected to dramatically increase in coming years as new LNG projects ramp up to full production rates.34 Australia is the third largest LNG exporter in the Asia-Pacific region and the fourth largest LNG exporter in the world.35 In the 2012-13 period, Australia exported 24.33 million tonnes of LNG.36

It is predicted that more than $170 billion worth of investments in production, pipelines and LNG facilities could make Australia the world’s largest LNG exporter by 2020.37

FOREIGN INVESTMENTMajor domestic and foreign companies operating in Australia include Santos, Woodside, Chevron, ConocoPhillips, ExxonMobil, Origin Energy, BG Group, Apache Corporation, Inpex Corporation, Total, Shell and Statoil.38

The recent stream of CSG, shale gas and LNG projects in Australia has also attracted Asian companies such as Sinopec, China National Offshore Oil Corporation, Tokyo Gas and China National Petroleum Corporation that are interested in purchasing gas for markets in China and Japan and the upstream assets which will be developed to supply these projects.39

CONVENTIONAL OIL AND GAS

OFFSHORE CONVENTIONAL OIL AND GASMost of Australia’s conventional oil and gas resources are associated with giant offshore gas fields in the Carnarvon, Browse and Bonaparte basins.40 Other Australian offshore petroleum basins include the Otway, Gippsland and Bass basins. However, only around 20% of Australia’s offshore petroleum basins are currently covered by petroleum titles.41

As at mid-2013, approximately 1,500 exploration wells had been drilled in Australia’s seabed territory.42 The number of exploration wells drilled in offshore waters has halved over the past decade.43 Each year, the Federal Government releases additional offshore acreage for petroleum exploration. The Federal Government’s ‘2014 Offshore Petroleum Acreage Release’ comprised 30 areas located in the offshore regions of the Northern Territory, Western Australia, Victoria and the Territory of Ashmore and

Cartier Islands.44 26 areas are available for work program bidding and four areas are available for cash bidding.45

Currently, there are three operating LNG processing plants in Australia which use Australia’s conventional offshore gas resources to produce LNG.46 These are the Northwest Shelf LNG project and the Pluto LNG project in Western Australia and the Darwin LNG project in the Northern Territory. The location of these projects is shown in Figure 2.


Figure 2: Location of Australia’s LNG projects 47


A summary of Australia’s existing and planned LNG projects using offshore conventional gas resources is set out in Figure 3.

Figure 3: Australia’s existing and planned LNG projects using offshore conventional gas 48

LIQUEFACTION TERMINAL

EQUITY PARTNERS STATUS / ONLINE DATE

TRAINS/ TERMINALS

CAPACITY (APPROX)

CONSUMER MARKETS

CAPITAL COST

PART A: Existing LNG projects using offshore conventional gas

Northwest Shelf LNG

Woodside, Shell, BHP Billiton, BP, Chevron, Mitsubishi and Mitsui - 16.7% each

Status: Existing 5 trains 16.3 Mtpa49

(755 Bcf/year)

Japan, China spot market and Korea49

A$27 billion49

Darwin LNG ConocoPhillips 57.2%, Santos 11.4%, Inpex 11.3%, Eni 11%, Tepco 6% and Tokyo Gas 3%

Status: Existing 1 train 3.6 Mtpa

(170 Bcf/year)

Japan and spot market

US$3.84 billion

Pluto LNG Woodside 90%, Kansai Electric 5% and Tokyo Gas 5%

Status: Existing 1 train 4.3 Mtpa50

(199 Bcf/year)

Japan and Malaysia

A$15 billion

PART B: Planned LNG projects using offshore conventional gas

Gorgon LNG Chevron 47.33%, ExxonMobil 25%, Shell 25%, Osaka Gas 1.25%, Tokyo Gas 1% and Chubu Electric Power 0.417%51

Status: Under construction

Online: Mid 201551

3 trains 15.6 Mtpa51

(723 Bcf/year)

Long-term contracts with Japan, Korea China, India, Mexico and spot market

A$52 billion

Ichthys LNG Inpex 66.07%, Total 30% and Japanese gas and electric utilities 3.93% (Australian subsidiaries of Tokyo Gas, Osaka Gas, Chubu Electric and Toho Gas)53


Online: 2017

2 trains 8.4 Mtpa54

(390 Bcf/year)

Japan and Taiwan

US$34 billion

Wheatstone LNG Chevron 64.14%,52 Apache 13%, KUFPEC (Kuwait) 7%, Shell 6.4% and Japanese gas and electric utilities 9.455%


Online: 2016

2 trains 8.9 Mtpa55

(412 Bcf/year)

Japanese utilities

A$29 billion

(continued over)




TRAINS/ TERMINALS

CAPACITY (APPROX)

CONSUMER MARKETS

CAPITAL COST

PART C: Planned LNG projects using offshore conventional gas and FLNG technology

Prelude LNG Shell 67.5%, Inpex 17.5%, Kogas 10% and CPC Corporation 5%


Online: 2017

1 floating terminal

3.6 Mtpa56

(167 Bcf/year)

Japan and Asian markets

A$11.4 billion

Cash Maple LNG PTTEP (Thailand) 100% Status: Preliminary concept stage57

Online: 201957

1 floating terminal

2 Mtpa58

(93 Bcf/year)

Potentially Thailand

N/A

Browse LNG Woodside 31.23%, Shell 26.63%, BP 17.21%, PetroChina 10.23%, Mitsui 7.35% and Mitsubishi 7.35%

Status: Cancelled FID for onshore facility in 2013. Potential floating terminal proposed.

Online: 2020

3 floating terminals59

Not yet specified

Not yet specified

N/A

Bonaparte LNG GDF Suez 60% and Santos 40%

Status: Pre-Front End Engineering and Design phase. Final investment decision scheduled for 201560

1 floating terminal

2.4 Mtpa61

(111 Bcf/year)

N/A US$8 billion

Scarborough LNG

BHP Billiton 50% and ExxonMobil 50% (operator)

Status: FID anticipated 2014-15

Online: 2020-21

1 floating terminal

6 – 7 Mtpa62

(278 – 325 Bcf/year)

N/A N/A

Sunrise LNG (Joint Development Area – Australia and Timor-Leste)

Woodside 33.44%, ConocoPhillips 30%, Shell 26.56% and Osaka Gas 10%

Status: Construction not yet commenced

Online: 2017

1 floating terminal

11.3 Mtpa

(525 Bcf/year)

N/A $5 billion

Note: To the extent of any inconsistency between the diagram in Figure 2 and the information in the tables in Figure 3 and Figure 17, the information in Figure 3 and Figure 17 prevail as those tables contain the most up to date information in relation to Australia’s LNG projects.


ONSHORE CONVENTIONAL OIL AND GASThe Cooper basin and the overlying Eromanga basin are the major sources of onshore conventional oil and gas in Australia (see Figure 4).

By Australian standards, the Cooper and Cooper-Eromanga basins are relatively mature fields, with the first commercial gas discovery in 1963 and the first oil discovery occurring in 1970.64 The Cooper basin has around 190 gas fields and 115 oil

fields which contain approximately 820 producing gas wells and over 400 producing oil wells that are connected to production facilities via 5,600 km of pipelines and flowlines.65

In 2013, approximately 5.1 Mmbbl of crude oil was produced in the Cooper and Cooper-Eromanga basins.66 Australia’s production of oil, condensate and LPG has been in decline since it peaked in 2000.67 In 2013, Western Australia produced the most crude oil (44.6 Mmbbl) and condensate (36.6 Mmbbl) and Victoria produced the most LPG (10.9 Mmbbl).68

Both conventional and unconventional gas is also being produced in the Cooper and Cooper-Eromanga basins.69

Some of the major players in Australia’s onshore conventional oil and gas industry operating in the Cooper and Cooper-Eromanga basins are Beach Energy, Drillsearch Energy, Santos and Senex Energy. Figure 5 shows the Cooper and Cooper-Eromanga basin oil and LPG production of these four company groups during the 2012-13 financial year, as well as their proved and probable oil reserves.

Figure 4: Location of Australia’s onshore basins 63

Figure 6: Australian gas basins and transmission pipelines 84

Oil and gas extracted from the Cooper and Cooper-Eromanga basins is transported to processing facilities at Moomba in South Australia or Ballera in south-west Queensland (although no crude oil is processed at Ballera).

Sales gas is then sent from the Moomba processing facilities to Adelaide (via a 790km pipeline) or to Sydney (via a 1,160km pipeline). Natural gas liquids, stabilised crude oil and condensate are sent from Moomba to Port Bonython (via a 659km pipeline) for export.80 Approximately 30 ships are loaded at Port Bonython each year, with a maximum size tanker of 110,000 tonnes capacity.81

Sales gas produced at Ballera is sent to Mt Isa and to Wallumbilla for transportation on to Brisbane, and the remaining gas, natural gas liquids and condensate from the Ballera production facility is sent to Moomba (via a 180km pipeline) for further processing.82

Figure 6 shows Australia’s gas transmission pipeline network which includes the gas transmission lines described above. Figure 6 also shows a number of other gas pipelines, such as the Amadeus Basin to Darwin Pipeline in the Northern Territory and the Dampier to Bunbury Natural Gas Pipeline, which connects gas fields in the Carnarvon Basin with industry and population centres in Western Australia.83


Figure 5: LPG and oil production and reserves for the 2012-13 financial year

COMPANY ACREAGE FY12-13 LPG PRODUCTION

FY12-13 OIL PRODUCTION

FY12-13 OIL RESERVES (2P)

Beach Energy

50,000km2 in the Cooper Basin70

43,800 tonnes71 (preliminary data for the Cooper Basin)

3.96 Mmbbl71 (including condensate) (preliminary data for the Cooper Basin)

17.7 Mmbbl (as at 30 June 2012 for Cooper and Eromanga Basins)72

Drillsearch Energy

23,000km2 (including application areas)73

4,950 tonnes74 (unaudited)

0.81 Mmbbl74 (including condensate) (unaudited)

28.5 Mmboe75

Santos Data not available

116,700 tonnes76 (Cooper Basin)

4.09 Mmbbl76 (including condensate) (Cooper Basin)

Data not available

Senex Energy

72,301km2 77 N/A 1.24 Mmbbl78 10.8 Mmbbl79


UNCONVENTIONAL OIL AND GASAustralia’s unconventional gas resources include CSG, shale gas and tight gas. Initial estimates indicate enormous potential for Australia’s unconventional gas resources.85 Australia has identified resources of more than 150 Tcf of CSG, almost 400 Tcf of shale gas and 20 Tcf of tight gas.86

COAL SEAM GASAustralia’s CSG economic demonstrated resources at January 2012 were 33 Tcf which is equivalent to about one third of the recoverable reserves from Australia’s conventional gas fields.87 The reserve life of CSG reserves is about 150 years at current rates of production, however, production is expected to increase substantially with the development of the CSG-LNG industry in Queensland.88 Australia also has substantial subeconomic demonstrated resources totaling approximately 60 Tcf and very large inferred CSG resources.89 CSG is primarily found in eastern Australia in the Surat (69%), Bowen (23%), Gunnedah (4%), Clarence-Moreton (1%), Gloucester and Sydney basins (see Figure 7 and Figure 8).90

CSG exploration began in Queensland in the Bowen basin in the late 1970s, and now accounts for 90% of Queensland’s domestic gas supply.93 Although economic demonstrated resources of CSG in Australia were negligible until the early 2000s, economic demonstrated resources increased at an average of 56% per year between 2000 and 2010.94

Figure 7: Basins with CSG potential 91

Figure 8: Location of Australia’s coal seam 2P gas reserves and gas infrastructure 92


The development of the CSG industry was also promoted by the introduction of the Queensland Gas Scheme in 2005, which requires 15% of Queensland’s electricity to be sourced from gas.95

The success of CSG exploration in Queensland and New South Wales has stimulated additional exploration in South Australia, Tasmania, Victoria and Western Australia. However, CSG exploration in Australia as a whole is still relatively immature.96

Around 36% of production in the Eastern Gas Market is currently sourced from gas in coal seams.97 Figure 9 compares Queensland’s total production of conventional gas against its production of CSG between 1997-98 and 2011-12.

Figure 10 shows the CSG and natural gas production across the whole of Australia from 1973-74 to 2009-10 and demonstrates that CSG production currently represents only a small proportion of Australia’s overall gas production.

CSG TO LNGCSG to LNG production is an emerging industry in Australia, with the first three Australian CSG to LNG projects currently under construction. These CSG to LNG projects will be the first in the world to use CSG as the principal feedstock.100 Further information about these projects is included in Chapter 6.

Figure 9: Queensland conventional gas and CSG production 98

Figure 10: CSG and Natural Gas Production in Australia 99


SHALE OIL AND SHALE GAS

Shale Oil

According to recent estimates, there are in excess of 17 million barrels of technically recoverable shale oil reserves within Australia, with Queensland possessing the majority of these reserves.101 Australia ranks sixth globally in terms of technically recoverable shale oil resources (see Figure 11). However Australia is not currently commercially producing shale oil due to technical and environmental challenges.102

Shale Gas

The full extent of Australia’s shale gas resources is currently unknown. However, recent estimates conclude that there may be approximately 437 Tcf of technically recoverable shale gas resources throughout the country, ranking Australia seventh globally in terms of technically recoverable shale gas resources104 (see Figure 12).

The commonly cited figure of Australia’s shale gas resources being 396 Tcf is only based on four of Australia’s basins and, as such, the undiscovered shale gas resource could indeed be over 1,000 Tcf if all prospective basins are considered.106

Figure 11: Top 10 countries with technically recoverable shale oil resources 103

Figure 12: Top 10 countries with technically recoverable shale gas resources 105


There is limited commercial production of shale gas throughout Australia at present due to several factors including the remote location of some basins, the significant capital investment that would be required to establish supporting infrastructure and limited access to hydraulic fracturing crews and appropriate drilling rigs.

The majority of shale gas exploration in Australia is currently being carried out in the Cooper basin, where Australia’s onshore traditional

gas reserves are largely located108 (see Figure 13). The Cooper basin is considered Australia’s most commercially viable region for shale gas development due to an estimated 342 Tcf gas-in-place and a risked recoverable amount of 85 Tcf, coupled with an extensive pipeline network already supplying gas to South Australia, New South Wales, Victoria and Queensland.109

Other basins in which exploration activities pursuing shale gas are currently being undertaken include

the Georgina, Galilee, Bowen, Sydney, Canning, McArthur and onshore Perth basins and the Beetaloo sub-basin.110 The Amadeus, Officer and onshore Bonaparte basins have also been noted for their future shale gas exploration potential.111

It is estimated that in excess of US$1.55 billion has already been invested in Australia’s shale gas industry by companies including Chevron, ConocoPhillips, Statoil, Total, BG Group and Hess.112

Figure 13: Australian basins with shale gas potential 107


TIGHT OIL AND TIGHT GASTight gas resources have long been known to exist in Australia but have only attracted exploration interest in the last decade. Total identified tight gas resources in Australia are currently estimated at around 20 Tcf. 113 The largest known resources of tight gas are in the Perth basin (10 Tcf), Cooper basin (8 Tcf) and Gippsland basin (1.7 Tcf).114

Significant ongoing exploration activity suggests these values are likely to grow, particularly in areas with established infrastructure such as the Cooper basin and the Perth basin (see Figure 14).115 Other occurrences of tight gas have been identified in Australia’s more remote onshore basins and offshore.116

Although tight gas is not currently produced in Australia, there are several planned projects for commercial production of tight gas fields including in the Perth basin.117

TIGHT GAS ACTIVITY IN THE COOPER BASINTight gas is the most mature unconventional play in the Cooper basin.119 According to the South Australian government, a Santos-operated joint venture has been exploring the Nappamerri Trough in the Cooper basin since the mid 1990s and has utilised a range of drilling, development and production technologies to extract tight gas from its existing Cooper basin fields.120 Senex Energy and Drillsearch Energy are also reported to have been exploring for tight gas in the Cooper basin.121

Figure 14: Basins with tight gas and shale gas resource potential and gas infrastructure 118

AUSTRALIAN CSG TO LNG PROJECTS


OVERVIEWThree world class CSG to LNG projects are currently under construction in Gladstone, Queensland (see Figure 15). These projects will be the first in the world to use CSG as the principal feedstock in the LNG production process.122 Two other CSG to LNG projects are proposed for the region and are well advanced in the planning and development phase (see Figure 15).

The LNG processing plants for the APLNG, GLNG and QCLNG projects are currently being constructed on Curtis Island, off the coast of Gladstone, Queensland. The image of the QCLNG Project in Figure 16 shows Train 1, Train 2, LNG Tank A and LNG Tank B on Curtis Island.

Figure 16: QCLNG project on Curtis Island 128

PHASE PROJECT

Under Construction

Queensland Curtis LNG (QCLNG) – owned by QGC (a BG group company), CNOOC and Tokyo Gas123

Australian Pacific LNG (APLNG) – a joint venture between Origin, ConocoPhillips and Sinopec124

Gladstone LNG (GLNG) – a joint venture between Santos, Petronas, Kogas and Total125

Planning and Development

Gladstone LNG Fisherman’s Landing – Gladstone LNG Pty Ltd, a wholly owned subsidiary of Liquefied Natural Gas Limited (which is owned 19.9% by a China National Petroleum Corporation subsidiary)126

Arrow LNG – a joint venture between Royal Dutch Shell and PetroChina127

Figure 15: CSG to LNG projects in Queensland

Figure 17: Summary of CSG to LNG projects 129



TRAINS/ TERMINALS

CAPACITY (APPROX)

CONSUMER MARKETS

CAPITAL COST

Queensland Curtis LNG

Train 1: BG 50% and CNOOC 50%

Train 2: BG 97.5% and Tokyo Gas 2.5%


Online: 2014


(394 Bcf/year)

China, Japan, Chile, Singapore and India131

US$20.4 billion

Australia Pacific APLNG

Origin Energy 37.5%, ConocoPhillips 37.5% and Sinopec 25%


Online: mid-2015

2 trains 9 Mtpa132

(417 Bcf/year)

China and Japan

A$24.7 billion132

Gladstone LNG Santos 30%, Petronas 27.5%, Total 27.5% and Kogas 15%


Online: 2015


(361 Bcf/year)

Malaysia and Korea

US$18.5 billion134

Gladstone LNG Fisherman's Landing

Gladstone LNG Pty Ltd Status: Pending the securing of gas supply, the project is effectively on a care and maintenance program 135


(176 Bcf/year)

Potentially China National Petroleum Corporation

US$1.1 billion

Arrow LNG Shell 50% and PetroChina 50%

Status: EIS plan submitted; FID postponed137

Stage 1: 2 trains

Proposed Stage 2: 2 trains138

Assuming 4 trains – up to 18 Mtpa139

(834 Bcf/year)

China A$24.2 billion

A summary of the three CSG to LNG projects that are under construction and the two CSG to LNG projects in the planning and development phase is set out below:

AUSTRALIAN CSG TO LNG PROJECTS


INVESTMENT STRUCTURES

Investments into Australia’s petroleum industry generally take one of two forms – either the acquisition of an interest in a company which owns an oil and gas project, or the acquisition of a direct interest in the assets and business of the oil and gas project.

COMPANIESIn Australia a ‘company’ is a separate legal entity that is established under Australia’s Corporations Act 2001 (Cth) (Corporations Act), and whose formation and ongoing operations are regulated by the Australian Securities and Investments Commission (ASlC).

There are broadly three types of companies that a foreign investor might encounter in the Australian oil and gas sector. They are listed public companies, unlisted public companies and private companies.

LISTED PUBLIC COMPANIESListed public companies are companies that are listed on the Australian Securities Exchange (ASX) or the securities exchange of another jurisdiction. Listed companies are highly regulated, being governed not only by the Corporations Act but also by the Listing Rules of the relevant securities exchange. Listed public companies will tend to be, but are not always, larger in size than unlisted public companies and private companies.

In Australia listed public companies have an obligation of ‘continuous disclosure’, which requires the company to disclose to the market (via releases to the ASX) all information that is price sensitive. This obligation is subject to a limited number of exceptions.

The acquisition by a foreign investor of an interest in a listed public company can be ‘on market’ or ‘off market’, and may be friendly or hostile. An investor may directly approach one or more of the existing major shareholders with a proposal to acquire their shares. Alternatively, an investor may approach the company with a proposal to acquire an interest in the company (for example by purchasing new shares or other securities in the company) or to take over the company. There are limits on the size of the shareholding that an investor may acquire without launching a formal takeover, and rules that govern the ‘creeping’ of the size of a shareholding over time without a takeover.

Examples where a foreign investor has acquired an interest in an Australian listed public company in the petroleum industry include PetroChina and Royal Dutch Shell’s joint acquisition of Arrow Energy in 2010 for A$3.5 billion and BG Group’s acquisition of QGC in 2009 for A$5.3 billion.

UNLISTED PUBLIC COMPANIES AND PRIVATE COMPANIES Unlisted public companies and private companies are generally far less regulated than listed public companies. They are not

subject to the Listing Rules, and are governed primarily by the Corporations Act. Different rules apply to unlisted public companies and private companies, and private companies are the least regulated of the two. However, the acquisition of an interest in an unlisted public company which has less than 50 shareholders and a private company is essentially the same.

INCORPORATED JOINT VENTURESWhere two or more parties are shareholders in an unlisted public company or private company which owns an oil and gas project, this is often referred to as an incorporated joint venture.

Listed public companies, unlisted public companies and private companies are all common in the Australian petroleum industry, and a foreign investor who wishes to acquire an interest in an oil and gas project that is owned by one of these companies may be able to do so by buying an interest in the company.


ASSETSThe other way for an investor to acquire an interest in an oil and gas project in Australia is to acquire a direct interest in the assets and business of the oil and gas project. This is quite common in the Australian oil and gas industry, particularly where the project is not wholly owned by a single owner.

UNINCORPORATED JOINT VENTURESUnincorporated joint ventures are very common in the Australian oil and gas industry. An unincorporated joint venture is where two or more parties own interests in the assets of an oil and gas project, and the project is governed by a contract between the parties (a ‘joint venture agreement’ or ‘joint operating agreement’). This contract sets out the arrangements between the parties for the development and operation of the project, the sharing of costs and the sharing of production from the project.

The joint operating agreement will set out the scope of the venture, the obligations and commitments of individual parties and provisions covering the financing of the venture and the entitlement of individual participants to the outputs of the venture. The rights and obligations of parties to the joint venture are governed by contract without any significant legislative interference.

Another feature of the unincorporated joint venture is that participants have individual liability in proportion to their interest in the joint venture.

In Australia, unincorporated joint ventures are the most favoured structure for oil and gas projects

where there are multiple owners due to various tax and other benefits.

One tax benefit of an unincorporated joint venture is that, structured carefully, the project is not a separate legal entity for tax or other purposes. It is a purely contractual relationship between the parties to the joint venture. The unincorporated joint venture does not lodge a joint tax return. Instead each party to the joint venture must lodge a separate tax return. This allows each party flexibility in relation to the tax treatment of the income and expenses referable to its share of the joint venture.

Another benefit of an unincorporated joint venture is that tax losses (such as those which arise in the exploration phase of a resources project) are immediately available to offset other income of the party, unlike incorporated joint ventures where the joint venture company’s losses are ‘locked up’ in the company and are not available to be netted off against other income of the shareholders.

However, careful structuring is needed to prevent an unincorporated joint venture from being a partnership for tax purposes.

The activities of the joint venture will be conducted by an ‘operator’. This will normally be the party with the largest interest in the joint venture, a wholly owned subsidiary of that party, or a company which is jointly owned by all of the parties who have an interest in the joint venture.

Joint operating agreements will often contain restrictions on a party who wishes to sell all or part of their interest in the joint venture. There may be a requirement that

the party wishing to sell its interest has to first obtain the consent of the other parties to the joint venture. Another possible restriction requires the seller to grant a ‘pre-emptive right’ to the other parties to the joint venture, allowing them to buy the interest that is for sale at the same price, and on the same terms, as a third party buyer is willing to accept. In some cases there is both a consent requirement and a pre-emptive right, although this is not common.

FARMIN AGREEMENTS AND FARMOUT AGREEMENTSFarmin agreements (also known as farmout agreements) are another common form of project participation in the Australian petroleum industry. Under a farmin agreement, a party (Farmee) agrees to fund certain exploration costs for the project or pay an upfront capital contribution to the other party (Farmor) in exchange for an interest in the underlying petroleum tenement which is owned by the Farmor. The interest received by the Farmee is a “farmin interest” and the interest assigned by the Farmor is a “farmout interest”.

Farmin agreements are generally used in the exploration stage of petroleum projects. Often, a farmin agreement will be entered into where the Farmee has funds to conduct exploration but does not have sufficient access to suitable exploration tenements, and where the Farmor holds suitable exploration tenements but does not have the funds to explore them.

INVESTMENT STRUCTURES

Similarly, a Farmor may decide to enter into a farmout agreement where it holds an exploration tenement over an area of land that is peripheral to its main project and that it does not wish to further explore.

The farmin agreement will set out the specific activities that

the Farmee must fund, or the amount of capital contribution that it must make and the timing of that payment, in order for the Farmee to obtain an interest in the petroleum tenement. Once the Farmor has transferred an interest in the petroleum tenement to the

Farmee or earned an interest in the petroleum tenement, the Farmee and Farmor will generally form a joint venture (governed by a joint operating agreement) for the continued exploration, and subsequent development, of the petroleum tenement.

COMPANY OR ASSETSWhen deciding whether to acquire an interest in the company which owns an oil and gas project, or a direct interest in the assets of the project itself, it should be noted that neither method is inherently better than the other. Sometimes only

one method will be available in the circumstances of the particular oil and gas project and the party who is wishing to sell.

In other cases both options might be open, and the best approach

will need to be determined on a case-by-case basis. Often tax and other legal issues will play a significant part in determining the best acquisition method.

INVESTMENT VEHICLEIt is generally possible for a foreign buyer to directly acquire shares in an Australian oil and gas company, or an interest in the assets and business of an Australian oil and gas project.

The choice of investment vehicle for a foreign investor into the Australian oil and gas industry will largely be driven by tax considerations, including the tax laws of both Australia and the foreign investor’s home jurisdiction, and the interaction between those tax laws.

More often than not, foreign investors will establish an Australian incorporated private company as the investment vehicle. Sometimes

the new Australian company will be directly owned by the foreign investor, while at other times there will be one or more interposed holding companies incorporated in other jurisdictions. The best investment structure will depend upon the circumstances of the particular case, and will need to be determined on a case-by-case basis.

An Australian incorporated private company must have at least one shareholder, and may not have more than 50 non-employee shareholders. It must have at least one director, including a director who ordinarily resides in Australia.

Relative to public companies, private companies are less tightly regulated and subject to less onerous reporting requirements. Areas in which this more relaxed regulatory approach is evident include the regulations and restrictions in relation to meetings, the appointment, qualification and removal of directors, the giving of financial benefits to directors and related parties, the power to allot shares and the required contents of annual reports.


CURRENT HOT TOPICS

FLOATING LNG

OVERVIEWFloating LNG (FLNG) technology continues to attract significant interest as participants search for technologies that will more efficiently and cost effectively monetise gas resources.

FLNG technology involves the treatment of gas and production of LNG onboard a purpose-built vessel located at an offshore gas field.

The Commonwealth Scientific and Industrial Research Organisation (CSIRO) (Australia’s national science agency) estimates that Australia has approximately 140 Tcf of ‘stranded’ gas held in offshore gas reserves.140 FLNG technology has the potential to unlock Australia’s substantial, and otherwise ‘stranded’, offshore gas fields that are currently considered uneconomic to develop via conventional land-based LNG development methods.141

There are currently no FLNG facilities in production anywhere in the world. Australia is likely to become the first country where FLNG is used, with two FLNG projects in Australia (Shell’s Prelude FLNG Project and the GDF Suez/Santos Bonaparte FLNG Project) having already received approval, and several others also planning to use FLNG technology (see Figure 3: Australia’s existing and planned LNG projects using offshore conventional gas – Part C).142

As a result of market leading activity occurring in Australian and neighbouring waters, it is likely that considerable FLNG know-how and agility will reside

with owners, operators and service providers involved in these projects. Indeed, many say that Perth is expected to become a global FLNG knowledge hub.

PRELUDE FLNG PROJECTThe Prelude FLNG Project (a joint venture between Shell, Inpex, Kogas and CPC Corporation) is tipped to be the first FLNG Project anywhere in the world to reach production. First gas is estimated to occur by 2016.143

The Prelude FLNG Project is located in the remote offshore Browse basin off the coast of northern Western Australia. It is the first FLNG project in Australia to receive environmental approval and obtain a final investment decision. The permit area of the Prelude FLNG Project includes the Prelude and Concerto gas fields, which are estimated to have approximately 3 Tcf of liquids-rich gas.144

The Prelude FLNG vessel is anticipated to be the largest floating structure ever built, being 488 metres long, 74 metres wide and weighing about 600,000 tonnes when fully constructed.145 The vessel is currently being built by Samsung in South Korea and once complete, it will be towed into place and moored for approximately 25 years.146

The Prelude FLNG Project, which will utilise Shell FLNG technology, is expected to produce at least 3.6 Mtpa of LNG as well as LPG and condensate for export.

BONAPARTE LNG PROJECTThe Bonaparte LNG Project is a joint venture between GDF Suez (60% interest) and Santos (40% interest), which proposes to develop three remote gas fields located in the offshore Bonaparte basin (off the coast of the Northern Territory) using FLNG technology.147

The Bonaparte LNG Project is estimated to have approximately 220 Mmboe gas resources and is anticipated to produce 2.4 Mtpa of LNG.148 Environmental approval for the Bonaparte LNG Project was granted by the Australian Government in October 2012.149 A final investment decision is expected in late 2015, with the Project anticipated to be operational in 2019.150

BROWSE PROJECTIn August 2013, after protracted issues with the proposed onshore LNG facility, the Browse Joint Venturers (Woodside, Shell, Mitsui-Mitsubishi (MIMI) and PetroChina) announced that they had selected the use of FLNG technology as the development concept to commercialise the Browse field.151 The Joint Venture is proceeding with the Basis of Design phase using Shell FLNG technology and working towards final investment decision in 2015.152 The Browse FLNG Project is expected to operate for 50 years using three FLNG vessels.153


BENEFITS OF FLNGThe major attraction of FLNG is its potential to unlock and commercialise otherwise ‘stranded’ offshore gas fields. The technology offers an additional means of energy security against a backdrop of rising energy demand, significant construction costs and diminishing traditional energy sources. However, FLNG has several other benefits.

For gas producers in particular, FLNG represents a financially competitive development concept. It eliminates the need for expensive

pipelines from the offshore field to shore, as well as significant onshore infrastructure, reducing both project costs and the environmental footprint of the development.154 FLNG offers early start-up advantages in that the majority of the facility can be constructed simultaneously in shipyards and fabrication yards.155 Labour can also be sourced at cheaper rates, while payment of State royalties can be minimised.156 In comparison to onshore production methods, lengthy site selection processes are done away with and the environmental,

native title and social issues associated with onshore processing facilities are minimised.157

Shell is reported to have estimated that, over the life of the project, the costs of an FLNG Project can be around 30% to 50% less than an onshore facility.158

The mobility of the FLNG facility also potentially offers the flexibility to service numerous sites of a single producer, as well as the ability to commercialise smaller gas reserves, relocating the facility to another site following the depletion of reserves.159

UNDERGROUND COAL GASIFICATIONThe technical and environmental sustainability of underground coal gasification (UCG) is currently being investigated through two technology pilot projects in Queensland.160

Carbon Energy’s pilot project, located at Bloodwood Creek near Dalby, was in operation from October 2008 until October 2012

when it ceased all gasification at the site as a prerequisite for the decommissioning phase of the project.161 In February 2012, Carbon Energy became the first Australian company to export power generated by synthetic gas (also known as syngas) into the local commercial electricity grid using its UCG technology.162 Carbon Energy is

now working with the Queensland Government to develop and agree decommissioning plans.163

Linc Energy also developed a UCG technology pilot project near Chinchilla which tested five different gasifier operations and designs (see Figure 18).165 A gas to liquids plant at Linc’s UCG site was used to convert syngas into liquid fuels.166 In November 2013, Linc Energy announced that its UCG Gasifier 5 would cease operation and its UCG demonstration facility would be decommissioned.167

CURRENT QUEENSLAND GOVERNMENT POLICYIn July 2013, the Independent Scientific Panel (ISP), which was established by the Queensland Government, released its final report examining the future of the UCG industry in Queensland.168

Among the ISP’s key

Figure 18: Linc Energy’s demonstration facility in Chinchilla 164

CURRENT HOT TOPICS

recommendations were that Carbon Energy and Linc Energy be allowed to continue their pilot UCG project, but until successful decommissioning of the underground cavities used as part of the UCG process could be

demonstrated, no commercial UCG facility should be established.169

The Queensland Government has given its support for a future commercial UCG industry in principle, noting that continuing

trials will be undertaken to ensure UCG activities are conducted in an environmentally safe manner and that the necessary data can be gathered to make a final decision at a later date.

DOMESTIC GAS DEBATENatural gas is a critical energy resource for Australia. Since 1999-2000, domestic gas consumption has increased at an average rate of 4% per annum.171 Despite growing supply shortages and significant price increases, many claim that Australia has enough gas resources to support both local and international demand. However, there is a public debate over whether or not State and Federal Governments should impose a domestic gas reservation policy to ensure domestic supply.

A domestic gas reservation scheme has been a part of the Western Australian gas industry since the 1970’s. In its present form, the policy requires a commitment from LNG proponents to reserve the equivalent of 15% of LNG production from each export project for the domestic market in Western Australia.172

DomGas, an alliance of Western Australia’s peak energy users, argues Australia should implement a national reservation policy that would require major LNG projects to set aside 15% of gas production for domestic

supply.173 DomGas maintains that a national reservation policy will not discourage investment or increase sovereign risk and uses the apparent success of the state based reservation policy in Western Australia as justification for its stance.174

However, in April 2014 the Economic Regulation Authority of Western Australia (ERA) released a draft report titled Inquiry in Microeconomic Reform in Western Australia. In that draft report, the ERA stated that it did not find any evidence of an on-going shortfall of supply in the domestic gas market and expressed a view that a future gas supply shortfall is not any argument for government intervention in the domestic gas market.175 The ERA believes that the domestic gas reservation policy in Western Australia should be rescinded as soon as practicable.176 The ERA expressed concern that a domestic gas reservation policy has the following negative consequences:

• it increases reliance on subsidised gas prices, leading to over consumption of the resource;

• it inhibits dynamic efficiency

and technological innovation;

• it perpetuates the existence of industries that may not have a comparative advantage in Western Australia at the expense of investment in other industries; and

• it reduces the incentive for investors to invest in the gas industry in the longer term, reducing future levels of gas available for domestic or international use.177

The Australian Petroleum Production & Exploration Association (APPEA) also claims that a domestic reservation policy would reduce international competitiveness, potentially render some LNG projects uneconomic, be economically inefficient, divert gas from its highest value use and distort the gas market.178 APPEA believes that such a policy would actually impair local gas supply and affordability rather than improve it and do nothing to stimulate exploration and development in the gas sector.179


PRODUCTIVITY IN AUSTRALIAIn response to concerns that the exploration sector in Australia was experiencing rising costs and lower productivity, the Federal Government requested the Australian Productivity Commission to undertake an inquiry into the non-financial barriers to mineral and energy resource exploration in Australia. The purpose of the Productivity Commission’s inquiry was to:

• examine exploration approvals systems and processes to assess their efficiency and effectiveness;

• assess areas of duplication between the State, Territory and Commonwealth regulation for potential streamlining and further review; and

• assess costs associated with government processes and broader economic costs such as those associated with regulatory duplication but not related to taxation, financial incentives, fees, charges and royalties.

On 5 March 2014, the Productivity Commission released a report titled Mineral and Energy Resource Exploration which set out the results of its inquiry.180

The Productivity Commission’s report includes a number of recommendations for improvements to the regulatory environment for exploration activities. One such recommendation is that authorities responsible for exploration licensing:

• prepare and publish information on the government’s exploration licensing objectives and the criteria by which applications for exploration licences will be assessed; and

• publish the outcome of exploration licence allocation assessments,

including the name of the successful bidder and the reasons why their bid was successful.181

The Productivity Commission also recommends that regulators set target timeframes for their assessment and decision-making processes for exploration licensing and related approvals and that the lead agency for exploration should publish whole-of-government performance reports against these timeframes on their website.182 The Productivity Commission suggests that the expansion of online lodgement platforms will assist in the expedition of processing applications and that such measures will lessen unnecessary drawn-out decision making processes and consequently, any detrimental effects on applicants’ exploration timelines.

Another key recommendation of the Productivity Commission is that the efficiency of environmental assessment and approval processes under the EPBC Act be improved by strengthening bilateral arrangements with the states and territories for assessments and establishing bilateral agreements for the accreditation of approval processes where the state and territory processes meet appropriate standards.183 Other issues highlighted by the Productivity Commission include the need for development of coal seam gas exploration regulation to be based on scientific evidence and not be driven by subjective judgment,184 improving the management of land access and related decisions,185 and streamlining regimes of Indigenous heritage protection.186

With mineral and energy extraction industries accounting for almost

one-tenth of Australia’s GDP in 2012-2013,187 the Productivity Commission’s recommendations are important to cement not only the economic performance of this sector, but also its international competitiveness.

In a similar vein to the Productivity Commission’s report, international management-consulting firm McKinsey&Company released a report titled Extending the LNG Boom: Improving Australian LNG productivity and competitiveness (McKinsey Report) in May 2013.188 The McKinsey Report states that in the coming 20 or so years, the global demand (and in particular, Asia’s demand) for natural gas will continue to increase. Due to Australia’s geographic proximity and strong history of delivering LNG to Asian customers, as well as its wealth of unproduced gas reserves, Australia is well positioned to take advantage of this demand.

However, according to the McKinsey Report, the high costs of building new LNG projects in comparison to Australia’s competitors (for example, North America and East Africa) are jeopardising the chance of potential projects being established in Australia. The McKinsey Report recommends that Australia needs to reduce the costs of LNG projects by 20-30% in order to remain competitive on a global scale or the opportunity may be lost for at least another decade.

By tackling the existing productivity gap, the McKinsey Report concludes that Australia is likely to secure significant investments in its LNG sector, and reap the significant economic benefits that will consequently flow.

KEY LEGAL CONSIDERATIONS WHEN BUYING OR DEVELOPING

AUSTRALIAN OIL AND GAS PROJECTS


When a foreign buyer is considering the acquisition of an interest in an Australian oil and gas project or the development of a new Australian oil and gas project, there are a number of legal issues that should be taken into account.

These issues include:

• foreign investment approval; • exploration and production rights;• competing resources;• landholder compensation;• native title;

• cultural heritage;• environmental approvals and

assessment; • competition issues; • royalties; and • employment relations and

skilled labour.

Depending on the structure of the transaction, corporate and tax issues may also require consideration

LandholderCompensation

consents & restrictions

PetroleumTenementsexploration &

production rights

CompetingResources

coal, minerals,geothermal &

agriculture

Native Title & Cultural Heritage

TaxCommonwealth

& State GovernmentRoyalties &

PRRT

EmploymentRelations &

Skilled Labour

Environmentapprovals & assessment

KEY LEGALISSUES

Foreign Investment

Approval

Competition

FOREIGN INVESTMENT APPROVALAs a general principle, the Australian Government welcomes foreign investment and recognises the many benefits it provides to Australia. This is reflected in the Government’s permissive and non-discriminatory approach to foreign investment (including the flexible nature of the national interest test).

While in most cases, investment by foreign entities into the Australian oil and gas sector will require approval under Australia’s foreign investment laws and policies, obtaining the necessary approval will generally be relatively straightforward.

It is, however, of paramount importance that any foreign investor proposing to invest in Australia understands and appreciates Australia’s foreign investment regime, is cognizant of community sensitivities and seeks to propose an investment and structures which address both the strict legal requirements and community sensitivities.

AUSTRALIA’S FOREIGN INVESTMENT REGIMEForeign investment into Australia is regulated principally by the Foreign Acquisitions and Takeovers Act 1975 (Cth) and associated Regulations (FATA), and Australia’s Foreign Investment Policy (Policy). The Australian Treasurer is responsible for the foreign investment framework and reviews investment proposals against the national interest on a case-by-case basis. The Foreign Investment Review Board (FIRB) is a non-statutory body which advises the Treasurer on the foreign investment regime and, along with the Board Secretariat which is within the Federal Treasury,

is responsible for the day-to-day administration of the regime.

The Treasurer can block proposals that are contrary to the national interest or apply conditions to a proposal to address national interest concerns.

To facilitate obtaining foreign investment approval, it is important that a foreign investor:

• respect the process and consult with FIRB prior to any public announcement of any proposal;

• appreciate and manage the political sensitivities and policy framework;

• avoid any attempt to publicly manipulate reporting of the proposal to enhance the success of the proposal;

• develop a clear whole of government strategy which engages the Government, the Opposition, the minor parties and independent political representatives; and

• proactively considers and formulates its intentions, and the conditions it is willing to accept, in respect of the proposed investment.

TIMINGFIRB has 30 days from the date it receives a FIRB application to reach a decision and a further 10 days (ie 40 days in total) to advise the applicant of its decision.

In some circumstances, FIRB may require additional time to assess an application and reach a decision. FIRB can make an “interim order” (which is gazetted) which provides FIRB with a further 90 day review

period. At this time, the FIRB application will become “public”. As a matter of practice, however, where FIRB requires further time to assess an application, FIRB usually requests that the application is “voluntarily” withdrawn and resubmitted, which restarts the 40 day period for FIRB to consider the application and advise of its determination. It is usual in these circumstances (particularly where confidentiality is important) for the applicant to comply with FIRB’s request to withdraw and resubmit its application.

Whether FIRB is likely to require additional time depends on the nature of the foreign investor and its proposed investment, how many applications FIRB is considering at the time, the timing of the application (ie whether it is made near a holiday period such as Easter or Christmas) and whether there is an election or change of government occurring at the relevant time. From the announcement of a federal election until the new government is elected, FIRB is unlikely to make any decision in relation to a sensitive FIRB application as the government is in caretaker mode during this period.

NOTIFICATIONThe FATA and the Policy require notification to FIRB of certain investment proposals by ‘foreign persons’ and ‘foreign government investors’.

A foreign person is:

• any corporation in which a natural person not ordinarily resident in Australia, or a foreign corporation, holds at least a 15% interest; and

• any corporation in which two or more persons, each of whom

KEY LEGAL CONSIDERATIONS WHEN BUYING OR DEVELOPING AUSTRALIAN OIL

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is either a natural person not ordinarily resident in Australia or a foreign corporation, hold at least a 40% interest in aggregate.

The Policy defines ‘foreign government investor’ as:

• any body politic of a foreign country or part of a foreign country (or a part of any such body politic);

• any entity in which governments, their agencies or related entities

from a single foreign country have an aggregate interest (direct or indirect) of 15% or more;

• any entity in which governments, their agencies or related entities from more than one foreign country have an aggregate interest (direct or indirect) of 40% or more; and

• any entity that is otherwise controlled by any foreign

governments, their agencies or related entities, and any associates, or could be controlled by them including as part of a controlling group.

As a general rule, investments by foreign persons and foreign government investors in the Australian oil and gas sector will require notification to FIRB in the following circumstances:

TYPE OF FOREIGN INVESTOR TRIGGER FOR FIRB NOTIFICATION

Foreign government investor Any direct investment in an Australian business or corporation irrespective of the value of the transaction.

Any investment of an interest of 10% or more is considered to be a direct investment. Investments that involve interests below 10% may also be considered direct investments if the acquiring foreign government investor is building a strategic stake in the target, or can use that investment to influence or control the target.

The foreign person is not:• a foreign government investor;

or• a United States investor; or• a New Zealand investor.

Any acquisition of a ‘substantial interest’ (ie greater than 15% for a single foreign person or an aggregate of 40% for two or more foreign persons) in an Australian business or corporation where the business or corporation is valued at more than A$248 million (this amount is indexed on 1 January each year).

The foreign person:• is a United States investor or a

New Zealand investor; and• is not a foreign government

investor,and the investment is not in prescribed sensitive sectors.

Any acquisition of a ‘substantial interest’ (ie greater than 15% for a single foreign person or an aggregate of 40% for two or more foreign persons) in an Australian business or corporation where the business or corporation is valued at more than A$1,078 million (this amount is indexed on 1 January each year).

The prescribed sensitive sectors include the transport sector (including port facilities and shipping services provided within, or to and from, Australia).

In addition, FIRB notification is required for the acquisition of a production tenement (which includes a petroleum lease) regardless of the value of that tenement. FIRB notification is also required for

the acquisition of an interest in a production tenement which provides the holder with an interest in an agreement involving the sharing of profits or income from the use of, or dealings in, Australian urban land.


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FIRB APPROVAL IN PRACTICEThe fundamental test applied by FIRB in assessing a proposed investment is whether the proposal will be contrary to Australia’s national interest. In applying this test, FIRB will consider matters set out in the

Policy including the investment’s likely effect on Australia’s national security, competition, tax revenues, the economy and the “character” of the investor.

In applying the national interest test, FIRB will typically consider the following factors:

FACTOR EXPLANATION

National security The extent to which the proposal may affect Australia’s ability to protect its strategic and security interests.

Competition Whether the proposal may result in an investor gaining control over market pricing and production of a good or service in Australia.189

Tax revenues Any likely impact of the proposal on Australian tax revenues.

Other Australian Government policies

Consistency of the proposal with other government policies, including in relation to environmental impact.

Impact on the economy and the community

The potential impact of the foreign investment on the general economy, including in relation to any plans to restructure the Australian target company, the nature of the funding of the acquisition, the level of Australian participation in the Australian target and “the extent to which it will ensure a fair return for the Australian people”.

“Character” of the foreign investor

The extent to which the foreign investor operates on a transparent commercial basis and is subject to adequate and transparent regulation and supervision.

EXPLORATION AND PRODUCTION RIGHTSIn Australia, petroleum is owned by the state and the right to explore for and produce petroleum is granted and regulated by either:

• the relevant State or Territory Government, if the resource is situated within the territorial

borders of the State or Territory (including the coastal waters of that State or Territory); or

• the Federal Government, if the resource is located in Commonwealth waters.

Each State and Territory has its own legislation regulating petroleum exploration and production rights within its jurisdiction (including its coastal waters to the point which is three nautical miles from the low tide mark). The Commonwealth

Generally speaking, it is unusual for the Treasurer to prohibit foreign investment and, in the overwhelming majority of transactions, FIRB approval is given with minimal or no conditions.


has its own legislation (principally the Offshore Petroleum and Greenhouse Gas Storage Act 2006 (Cth) (OPGGS Act)) which regulates offshore petroleum activities in Commonwealth waters. Commonwealth waters commence three nautical miles from the low tide mark and end at the outer limits of the Australian continental shelf. Although the petroleum laws of each State and Territory of Australia and the Commonwealth are different, they do have many similarities.

EXPLORATION RIGHTSThe right to explore for petroleum is granted pursuant to an exploration permit or licence190 and, if applicable, the associated environmental authority, which authorise the holder to go onto the land specified in the permit or licence for the purpose of exploring for petroleum.

In some Australian jurisdictions, exploration permits or licences can only be granted following the call for tenders from the Minister, while in other jurisdictions, an “over the counter” application process applies.

In most Australian jurisdictions, exploration permits or licences are usually granted for five to six years. However, in Queensland, an authority to prospect for onshore petroleum can be granted for up to 12 years.191 Exploration permits or licences can be renewed, however, in some Australian jurisdictions, there is a cap on the total length of the term of the permit and the number of renewals granted.

Exploration permits or licences often cover very large areas of land, but the holder is usually required to periodically relinquish parts of the exploration area so that the area of the exploration permit or licence is reduced over time.

Exploration permits or licences will usually contain conditions which require the holder to carry out certain specified exploration works, to a certain value, for each year of the exploration permit or licence. These work obligations and expenditure commitments are usually set by the relevant Government department in consultation with the holder of the permit or licence.

For onshore petroleum exploration, the holder of an exploration permit or licence is required to give the owner or occupier of the underlying land prior notice of entry onto the land, including details of the exploration activities to be carried out and the timing of those activities. The holder of the exploration permit or licence will also be required to compensate the owner or occupier of the land for any impacts of the exploration activities. Sometimes compensation must be determined in advance of the exploration activities taking place, and in other cases, after the activities have taken place.

There is an annual fee payable for an exploration permit or licence which is usually based on the area of the licence. For exploration permits or licences granted under a competitive tender process, there may be a cash bid component in the tender. As such, the cash bid amount specified in the winning tender (which may be a significant amount) will also be payable upon the grant of the exploration permit or licence.

The holder of an exploration permit or licence will be required to provide to the relevant Government department security for the performance of the holder’s obligations under the exploration permit or licence and, if applicable, the environmental authority (including obligations under relevant petroleum and environmental laws).

The security is usually in the form of cash or a bank guarantee.

The holder of an exploration permit or licence will need to comply with its rehabilitation obligations in relation to land affected by its exploration activities.

Exploration permits or licences can be held by one or more parties and interests in exploration permits or licences can be transferred, subject to obtaining the prior consent of the relevant Government department/s.

Subject to obtaining any necessary FIRB approval, foreign parties are entitled to hold interests in exploration permits or licences, both on their own and as joint holders with others.

In most Australian jurisdictions, retention leases or licences192 are available to provide security of title over currently non-commercial discoveries of petroleum for a reasonable period until these discoveries become commercially viable. Retention leases or licences are granted over a particular area selected from the existing exploration permit and are usually granted for a period of five years and can be renewed, except in Victoria where a retention lease for onshore petroleum exploration is granted for 15 years and cannot be renewed.193

PRODUCTION RIGHTSAn exploration permit or licence does not give the holder a right to produce petroleum. If the holder of an exploration permit or licence discovers a commercially viable petroleum resource and wishes to hold production rights, then the holder must apply for a production lease or licence.194

A production lease or licence and, if applicable, any associated


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environmental authority authorises the holder to go onto the land specified in the production lease or licence for the purpose of petroleum production. In most Australian jurisdictions, production leases or licences are granted for between 21 and 30 years (which includes, if applicable, any renewal). However, in Victoria195 and offshore waters regulated by the Commonwealth196, production licences are usually granted for the life of the resource, while in the Western Australia, production licences197 are granted for the life of production plus five years.

Before a production lease or licence can be granted, a number of legal

issues will need to be addressed, including landholder compensation and consents (if applicable), native title, cultural heritage, environmental approvals and competing resource rights. Some of these issues are also relevant in relation to the grant of an exploration permit or licence. These issues are discussed in further detail later in this publication.

The holder of a production lease or licence will be required to provide to the relevant Government department security for the performance of the holder’s obligations under the production lease or licence and, if applicable, the environmental authority (including rehabilitation obligations and other obligations

under relevant petroleum and environmental laws). The security is usually in the form of a bank guarantee, and may be for a very significant amount.

Just like exploration permits or licences, production leases or licences can also be held by one or more parties and interests in production leases or licences can be transferred, subject to obtaining the prior consent of the relevant Government department.

Foreign parties are entitled to hold interests in production leases or licences, both on their own and as joint holders with others, subject to obtaining any necessary FIRB approval.

OFFSHORE PETROLEUMPetroleum exploration and production in Commonwealth waters is governed by “Joint Authority” and other arrangements between the Federal Government and the government of the adjacent State or Territory. The Joint Authority for each state and the Northern Territory comprises the responsible Commonwealth Minister and the relevant state or Northern Territory minister.

The Joint Authority makes major decisions under the OPGGS Act in relation to offshore petroleum titles. For example, the Joint Authority has the power to:

• release offshore petroleum exploration acreage for tender;

• assess bids for offshore petroleum exploration acreage; and

• grant, renew, vary, suspend, or cancel offshore petroleum titles.

The National Offshore Petroleum Titles Administrator works alongside the Joint Authority and is responsible for assisting and advising the Joint Authority and the responsible Federal Minister.

Following the Australian Government Inquiry into the Montara oil spill and fire in 2009, a number of changes have occurred, and are still occurring in the offshore regulation of oil and gas. The Joint Authority arrangements in particular have come under review, resulting in some Joint Authority functions going to a national agency called NOPSEMA (the National Offshore Petroleum Safety and Environment

Management Authority) which commenced operating under its new mandate in 2012.

NOPSEMA is now responsible for approval of Safety Plans, Well Operations Management Plans and Environmental Plans. While separate environmental approval might still also need to be obtained under the EPBC Act there are currently moves afoot to bring all environmental approval requirements into NOPSEMA.


COMPETING RESOURCES – OVERLAPPING TENEMENTSA number of Australian States have legislation which allows exploration and production rights for petroleum and CSG to overlap with exploration and production rights for coal, and governs the interaction between petroleum and CSG and coal exploration and production where this overlap occurs. The purpose of this legislation is to facilitate and encourage the commercial production of both CSG and coal wherever possible.

For example, in Queensland, if an application for a petroleum lease is made over an area of an exploration permit for coal, the petroleum lease application must include a ‘CSG statement’ and other information that addresses the ‘CSG assessment criteria’ and a proposed development plan which assess the likely affects of petroleum

production on the overlapping coal exploration tenement.198

A ‘CSG statement’ assesses the likely effect of proposed petroleum production on the future development of coal resources, and must consider the technical and commercial feasibility of coordinated CSG and coal production from the land.199

Where there is conflict between the activities of CSG and coal tenement holders there is a system to determine which holder will have priority. However, in Queensland at least, the precise system for resolving competing tenure priorities is under review and is proposed to be changed in 2014 to a system which has been developed and endorsed by the resources sector.

It is also possible for exploration and production rights for CSG to overlap

with geothermal or gas storage rights. In those cases a similar statutory regime to resolve conflicts with competing operations and establish priority applies, as for CSG and coal tenure overlaps.

For any project proponent, the issues that need to be considered when dealing with overlapping tenures are:

• whether the presence of an overlapping tenure means that additional processes need to be followed in a future tenure application; and

• whether the presence of an overlapping tenure imposes any limitations on the carrying out of activities.

The answers to each of these questions depends on the particular tenures involved.

LANDHOLDER COMPENSATIONThe statutory rights to explore for and produce petroleum which are given by exploration licences and petroleum leases granted under the laws of the various States and Territories of Australia are concurrent with (and do not displace) normal land ownership rights.

The ability to access private land to conduct exploration and production

activities is closely regulated, and compensation must be paid to owners and occupiers of land for any damage or inconvenience caused by the exploration and production activities sometimes in advance of the activities being carried out.

In most cases owners and occupiers of land must be given prior notice of an intended entry onto the land

to conduct petroleum activities. In some jurisdictions an access and compensation agreement will need to be agreed with the landowner (or determined by the relevant Court) before disruptive petroleum activities may be undertaken. In other cases the issue of compensation is left for determination until after the petroleum activities have been carried out.


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NATIVE TITLE AND CULTURAL HERITAGE In order to conduct petroleum activities, it is necessary to address two separate legal requirements in relation to Aboriginal and Torres Strait Islander rights. They are:

• native title; and

• cultural heritage.

NATIVE TITLENative title is defined as the rights and interests that are possessed under the traditional laws and customs of Aboriginal and Torres Strait Islander peoples, and that are recognised by Australian law. In some areas, native title has been deemed to be ‘extinguished’, such as freehold land, but in other areas native title continues to exist. Native title is protected and regulated primarily through the Native Title Act 1993 (Cth) (NTA), State native title legislation and the common law.

If native title exists in an area of land over which a petroleum permit application is being sought, certain native title parties are given the ‘right to negotiate’ with the petroleum permit applicants about how the applicant’s activities will affect the rights and interests of the affected native title parties. The petroleum permit cannot be granted until the applicant and the relevant native title party have come to an agreement as contemplated under the NTA or the National Native Title Tribunal (NNTT) has made a ruling about whether the petroleum permit should be granted (and if so, on what conditions). Petroleum exploration permits through to petroleum production permits as well as pipeline and facilities permits can all be subject to the ‘right to negotiate’

process although expedited procedures can sometimes apply.

Although the process is regulated by the NTA, the ‘right to negotiate’ gives significant leverage to registered native title claimants to negotiate commercially advantageous outcomes.

Typically the agreements reached under the ‘right to negotiate’ process will require payments to the registered native title claimants (such as annual payments during the life of the petroleum permit, or payment of royalties), and may also include terms relating to Aboriginal cultural heritage and Aboriginal employment quotas, training and scholarships.

Under the ‘right to negotiate’ process, if agreement cannot be reached, the NTA provides for determination of the matter by the NNTT. However an application for referral of the matter for determination cannot be made for at least six months from the commencement of negotiations. Although the NNTT is required to resolve the matter as soon as practicable, it is not required to make a determination before six months from when the matter was referred to it. Therefore, resolution of the ‘right to negotiate’ process, if it applies, can be lengthy, whether negotiated or resolved by the NNTT. An important feature of these negotiations is the statutory requirement to undertake the negotiations ‘in good faith’.

An expedited procedure may also be available to address native rights and interests in a manner that is quicker than the full ‘right to negotiate’ process. Acts attracting the expedited procedure are those acts

that are unlikely to interfere directly with community or social activities of the relevant native title parties, or to interfere with areas or sites of particular traditional significance to the relevant native title parties.

Agreements reached under the ‘right to negotiate’ and ‘expedited procedure’ process will generally only apply to a particular petroleum permit or permits. Accordingly, a new right to negotiate process may be required for each new petroleum tenure, including when a production lease is being sought over an existing exploration tenure.

An applicant for a petroleum permit may also satisfy the requirements of the NTA to enable the grant of a petroleum permit through an Indigenous Land Use Agreement (ILUA) with the applicable native title parties. ILUAs are very flexible and can encompass a broad range of considerations in addition to the grant. The NTA does not prescribe what can be included in an ILUA. Critically, ILUAs often provide for the native title party’s consent to possible Future Acts (as defined in the NTA), such as the future grant of production permits, or the construction of facilities or pipelines. However, the ILUA process is entirely voluntary and there is no statutory timeframe for an agreement to be reached or recourse to an authoritative body to make a determination.

To some extent, the existence of a current registered native title claim over an area of land is not relevant to an assessment of the potential significance of native title for a petroleum permit application over the land in question. This is because the existence of native title is not dependent on a claim being


made – the making of a claim is only a process by which native title is formally recognised. It must therefore be presumed that native title may exist in areas where it has not clearly been extinguished, unless a formal determination has been made by the Court that native title no longer exists in that area. Similarly, the existence of a native title claim over the area of an existing project is not relevant to the validity of the project approvals as native title would have been resolved at the time of grant of those approvals. Subsequent native title claims do not impact on project approvals that have already been validly granted (though they may have impact on the grant of any future approvals sought).

In the event of a petroleum permit application being made over an area where native title has not clearly been extinguished (and there has been no determination of native title by the Court), the NTA provides for a process of notification to enable native title claims to be made and registered. In those circumstances, the purpose of native title parties registering the claim would be to gain access to the ‘right to negotiate’ process. All registered native title claimants have a right to be a party to this process.

ABORIGINAL CULTURAL HERITAGEAboriginal cultural heritage is protected by State legislation (and to a lesser extent Commonwealth legislation) which imposes a broad ‘duty of care’ on proponents of activities to take all reasonable and practicable measures not to damage Aboriginal cultural heritage. The protection afforded is separate from native title and applies irrespective of whether native title exists.

Generally, the Aboriginal ‘cultural heritage’ that is protected by legislation includes matters such as human remains, rock-art and archaeological sites, and any areas or objects of significance to Aboriginal people because of their traditions or beliefs, or the history of the area. It is not necessary for the area to contain any markings or physical evidence of use or occupation; for example it could apply to a hill considered sacred by local Aboriginal people.

The cultural heritage duty of care may be satisfied in a number of ways. The most common methods are to enter into and comply with a cultural heritage management plan (CHMP) with the relevant Aboriginal parties, to comply with the ‘duty of care guidelines’ or to enter into another agreement (for example a native title agreement or ILUA) which also deals with cultural heritage.

In Queensland, in the event of an application for a petroleum permit requiring an environmental impact statement (generally production and pipeline permits), Aboriginal cultural heritage legislation requires that the applicant enters into a CHMP with relevant Aboriginal parties for the area of the petroleum permit before it can be granted. The Aboriginal cultural heritage legislation sets out a structured process and requirements for development of approved management plans. Even where the legislation does not require a CHMP, comparable plans or agreements about protecting cultural heritage are now entered into as a matter of course.

Depending on the scale of activities contemplated under the permit applied for, petroleum companies will frequently conduct (and the Aboriginal parties will frequently expect that petroleum companies will conduct) a cultural heritage

survey of the relevant areas. That will typically require the engagement of an anthropologist or archeologist acceptable to the Aboriginal party and several Aboriginal people with relevant knowledge to conduct the survey, and may take several weeks to a couple of months to complete. The results and recommendations of that survey will then feed into the terms of the management plan, which will typically include provision for:

• relocation of moveable objects of significance and protection of other objects;

• protocols for management of any cultural heritage ‘finds’ during establishment and operation of the project;

• protocols for management of any finds of human remains;

• cultural training for project employees;

• engagement of ‘cultural heritage monitors’ to supervise any activities which involve disturbance to the surface of the land or clearing of trees and objects from the surface; and

• possibly the establishment of ‘no go zones’ being areas in which activities cannot be carried out and the area otherwise left undisturbed.

• As discussed below, certain areas (ie wells being worked over) may have already been ‘cleared’ by a cultural heritage survey during the exploration or appraisal phase.

Management plans can include ‘stop work’ provisions in the event of certain finds being made (such as human remains).

The petroleum permit applicant will be expected to bear all the Aboriginal party’s expenses in conducting the cultural heritage survey and in negotiating the management plan.


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The process of negotiating an approved management plan generally takes a minimum of two months, and could potentially take ten months or more.

The management plan may be rolled-into, and form part of, any native title agreement required for the grant of the petroleum permit.

ABORIGINAL CULTURAL HERITAGE REQUIREMENTS FOR EXPLORATION ACTIVITIESIn order to undertake any exploration activities, it will be necessary to comply with the cultural heritage duty of care under which it may be necessary to negotiate a CHMP with relevant Aboriginal parties. However, a management plan may not be required for certain low-impact activities, activities within a relatively small confined area or activities in already highly disturbed areas, so long as various guidelines are complied with. However, any

more intrusive activities such as larger scale drilling or seismic surveys are likely to require (at the least) consultation with local Aboriginal groups, and probably engagement of ‘cultural heritage monitors’ to oversee the activity.

Isolated work area clearance surveys are usually conducted over the area of exploration activities, such as seismic surveys and drilling, prior to those activities commencing. A work area clearance survey is conducted in the field with a clearance team consisting of the petroleum company representative, specialists such as anthropologists and multiple traditional owners representing the relevant Aboriginal parties.

DUTY OF CARE – ABORIGINAL CULTURAL HERITAGEBecause the Aboriginal cultural heritage legislation generally imposes a ‘duty of care’ to take ‘all reasonable and practicable measures’ not to harm Aboriginal

cultural heritage, it is up to the person carrying out activities to ensure that this duty is discharged. A search of a Cultural Heritage Register alone will not be sufficient to discharge that duty.

Failure to adequately discharge the duty of care can result in large penalties and ‘stop orders’ to prevent further harm. This can mean potentially significant delays to activities on the land and may adversely affect the reputation of the company.

As noted above, petroleum companies often conduct work area clearance surveys as a way of discharging their ‘duty of care’. Areas cleared for work and cultural heritage sites identified are defined and recorded using geographic information system data. This information is then used to create specific maps outlining the relevant areas, which in turn is used in the field to place pickets and other markers to identify deviations around cultural heritage site exclusion zones. Conditions are also recorded in a document that is distributed to personnel in the field.

ENVIRONMENTAL APPROVALS AND ASSESSMENT

GENERALLYEach Australian State has its own environmental legislation which requires that all resource activities in that State must be covered by an environmental approval or authority (EA), of some kind. In some States, ie Western Australia, EAs can be administered by the same agency or government department that issues exploration and production tenures.

In addition, if the resource activities for a project are likely to impact on

environmental matters classified as being of National Environmental Significance, then the project must be referred to the Federal Government under the national Environment Protection and Biodiversity Conservation Act 1999 (Cth) (EPBC Act). If the Federal Government determines that the project is a ‘controlled action’ (on the basis that it is likely to have a significant impact on Matters of National Environmental Significance (MNES)), it will require assessment and approval under the EPBC Act.

Recently, the EPBC Act has been amended to include a new MNES, specifically for CSG development and large coal mining development. The new MNES “trigger” is “Water Resources” which includes both surface and groundwater systems. Federal assessment of such projects can also involve review of assessment material relating to water resources by an Independent Expert Scientific Committee appointed under the EPBC Act. The State Governments can also seek advice from the Independent


Expert Scientific Committee in their assessment.

The application and approval process for a State EA involves an assessment of the environmental impacts of the proposed resource activities and will generally involve, as part of the application, the preparation of an environmental management plan, a development plan, or operations plan which, together with the conditions of the EA, will govern the environmental aspects of the petroleum operation.

ENVIRONMENTAL IMPACT ASSESSMENTIn Australia, environmental assessment of a major resources project will invariably be undertaken through an Environmental Impact Assessment (EIA) process involving an Environmental Impact Statement (EIS).

An EIS may be required in conjunction with an application for an EA or the obtaining of Federal

Government approval under the EPBC Act. In some cases, the project proponent may prepare an EIS on a voluntary basis. There are a number of reasons why a proponent would elect to prepare an EIS voluntarily, including to ensure the approvals process proceeds with as much certainty as possible.

The EIS process and preparation of the EIS can however take a significant period of time to complete (up to two years). All EIS processes involve public notification of the draft EIS which enables anyone to make submissions in relation to the draft EIS.

An EA application can proceed at the same time as the application for a petroleum tenure but the EA cannot be granted until the EIS process is completed.

The purpose of an EIS is to assess likely impacts of the petroleum project on environmental values in the area (including, for example, any endangered regional ecosystem, any fauna habitat in the area, the effects of stream diversion and surface

and groundwater systems) and to consider management measures to address those impacts. Ultimately the EIS will be used to assist the relevant Government Department in setting conditions for the EA or approval under the EPBC Act.

Each of the State Governments has bilateral agreements in place relating to the EIA processes. The agreements accredit the State-based EIA processes as an assessment process under the EPBC Act. Consequently, there would usually only be one EIS undertaken for a project, which would satisfy both State and Federal requirements. In general, both State and Federal Governments do try to coordinate their responses to project assessment to avoid duplication and inconsistent conditions.

An “approvals bilateral”, by which State approvals processes may also be accredited for Commonwealth purposes may also be in operation, for some States late in 2014 or 2015.

COMMON ISSUES IN RESOURCE PROJECT ENVIRONMENTAL IMPACT ASSESSMENTS

ENDANGERED REGIONAL ECOSYSTEMS The existence of ‘endangered’ and ‘of concern’ regional ecosystems has the potential to impede the obtaining of a petroleum lease and associated EAs over the areas covered by the endangered and of concern regional ecosystems.

However the presence of an endangered regional ecosystem does not automatically mean that

resource activities will be prohibited in these areas.

The extent to which interference with any endangered regional ecosystem may be permitted will be a matter entirely for assessment of the particular importance of the vegetation, the management measures proposed by the proponent including possibly, re-vegetation with the same species or other “offset” arrangements. No definite position can be confirmed in advance of the

relevant assessment. However, resource activities have been permitted in areas of endangered regional ecosystems in the past.

CSG WATER AND GROUNDWATEROne of the main environmental issues dealt with by the EIA process for unconventional gas (including CSG) production, relates to the extraction and


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management of groundwater and salt, and management of the potential impacts of extraction on groundwater aquifers.

CSG is produced by dewatering coal seams to reduce the pressure that keeps the gas in place. This process brings significant quantities of water to the surface. The extraction, use and disposal of this water, which is usually highly saline, gives rise to a number of management issues concerning surface water and groundwater systems, as well as salt disposal.

EAs that need to be obtained for a project will identify potential environmental risks associated with the extraction of groundwater and possible impacts on groundwater aquifers. Conditions will be imposed to ensure these risks are properly dealt with.

As part of the State EA application process, CSG operators are required to show how they plan to manage CSG water. This will include information such as:

• flow rate, quantity and quality of expected CSG water;

• proposed management of CSG water, including use, treatment, storage or disposal;

• criteria for monitoring and assessing the management of CSG water; and

• proposed actions by the CSG operator should management criteria not be met.

CSG operators are also required to submit an annual evaluation of how effective and appropriate management of CSG water has been.

The Queensland Government’s Coal Seam Gas Water Management Policy is an example of a guideline for CSG operators in managing CSG water under their EA.

The objective of this policy is to be achieved by managing CSG water in accordance with the following two priorities:

• (Priority 1) CSG water is used for a purpose that is beneficial

to one or more of the following: the environment, existing or new water users, and existing or new water-dependent industries.

• (Priority 2) After feasible beneficial use options have been considered, treating and disposing of CSG water in a way that firstly avoids, and then minimises and mitigates impacts on environmental values.

Where the extraction of CSG water results in the loss of water to others who use groundwater, such as farmers and graziers, there is an obligation under some legislation (such as the Water Act 2000 (Qld)) to “make good” such losses of groundwater resources. This would usually take the form of deepening an existing bore, sinking a new bore or financial compensation.

Typically, Federal approvals will also require a groundwater management and monitoring plan to track the impact of groundwater extraction on groundwater aquifers.

PRESERVING AGRICULTURAL LAND AND REGIONAL PLANNINGAnother issue that can be dealt with in the EIA process involves the potential conflict between the agricultural use of land under which petroleum resources exist and the resource extraction. State laws have been developed to deal with these potential conflicts in different ways.

QUEENSLANDIncreasingly, regional planning initiatives are being adopted to better regulate potentially conflicting land

uses. An example is the recent Regional Planning Interests Act 2014 (Qld).

This legislation which commences operation from July 2014 establishes a new approval requirement, namely a “regional interest development approval” which is a pre-requisite to carrying out development in areas identified as being of “regional interest” under the legislation. Areas previously identified under the Strategic Cropping Act 2011 (Qld) are included as areas of regional interest.

Areas of “regional interest” can include areas that contain priority agricultural land, urban areas, and strategic environmental areas. These areas are required to be identified and mapped. Some exemptions apply to the need to obtain a regional interests development approval e.g. where the impact is not expected to be significant and agreement with the relevant landowner can be reached.


NEW SOUTH WALESThe NSW Government recently “finalised” the implementation of the Strategic Regional Land Use Policy (Policy) through further amendments to the State Environmental Planning Policy (Mining, Petroleum Production and Extractive Industries) 2007 (Mining SEPP). Significantly, the reforms prohibit CSG development in exclusion zones and within 2km of most exclusion zones, and require all proponents of proposed State significant mining and petroleum developments on biophysical strategic agricultural land (BSA Land) and critical industry cluster land (CIC Land) (collectively, Strategic Agricultural Land) to obtain a gateway certificate before a development application may be lodged.

BSA Land is land with high quality soil and water resources capable of sustaining high levels of productivity and either identified as BSA Land on the Strategic Agricultural Land Map or certified BSA Land by a site verification certificate. CIC Land is a concentration of highly productive industries within a region that are related to each other, contribute

to the identity of that region and provide significant employment opportunities (such as viticulture and equine land).

Under the Mining SEPP, the following areas of land are identified as CSG exclusion zones:

• land within a residential zone;• future residential growth area

land; • additional rural village land; and• CIC Land.

All CSG development is prohibited within the exclusion zones and within 2km of such zones, excepting CIC land (Buffer Zone). However, pipelines ancillary to CSG development are permitted within the Buffer Zone.

Despite the prohibition of CSG development in the exclusion zones, local councils may request that the Minister for Planning and Infrastructure recommend to the Governor that certain land be excluded from the prohibition. To date, no areas of land have been excluded and only time will tell as to whether councils will be willing to exercise this right.

Under the Mining SEPP, State significant mining and petroleum (including CSG) proposals on Strategic Agricultural Land will now require a gateway certificate before a development application can be lodged. The independent Mining and Petroleum Gateway Panel (Panel), comprising six members, is responsible for issuing gateway certificates and assessing the impacts of State significant mining and petroleum proposals.

Applications for gateway certificates must be referred to the Commonwealth Independent Expert Scientific Committee (IESC) and the NSW Minister for Primary Resources (Minister) for advice regarding the impact of the proposal on water resources. In considering applications, the Panel must have regard to advice provided by the Minister and IESC. However, the Panel cannot refuse to grant gateway certificates; instead it may only grant a certificate conditionally or unconditionally. A conditional gateway certificate is to include recommendations of the Panel and specify further studies to be undertaken by the proponent.

FRACCINGIn the early years of CSG production in Australia, fraccing faced significant opposition from landowners and environmentalists. In more recent times however it has become less of an issue.

For example, the July 2013 Report of the New South Wales Chief Scientist and Engineer into CSG activities in New South Wales found that most regulatory officials now placed

hydraulic fracturing quite low on the list of risks thought to be involved in CSG extraction. More emphasis was placed on managing CSG water and the impacts of CSG water extraction on groundwater aquifers.

In Australia, fraccing is currently regulated at the state level, and the policy and legislative positions in relation to fraccing vary from state to state.

In May 2013, the Standing Council on Energy and Resources endorsed the National Harmonised Regulatory Framework for Natural Gas from Coal Seams (National Framework).200 The National Framework sets out practice principles which are designed to provide guidance to regulators in the management of CSG and ensure that regulatory regimes are robust, consistent and transparent across all Australian jurisdictions.


AND GAS PROJECTS

QUEENSLAND In Queensland, fraccing must comply with strict environmental safety measures. The Queensland government requires CSG proponents to report on the location of any fraccing, the chemicals used, the toxicity of ingredients and mixtures, and to demonstrate that the fraccing will not cause environmental harm.201 CSG proponents are also required to undertake long-term monitoring of water produced from fraccing.

CSG proponents in Queensland are prohibited from using BTEX chemicals as a deliberate component of fraccing chemicals.202

NEW SOUTH WALESIn September 2012, the New South Wales government lifted a state-wide ban on the granting of new approvals for fraccing in CSG activities. The ban has been replaced with a Code of Practice that establishes a best practice framework covering the fraccing process, the use of chemicals in fraccing fluid, and the sourcing of water used in fraccing.203 The purpose of the Code of Practice is to ensure that the fraccing process is conducted in a safe manner and that communities, the environment and water resources are protected.204

Like Queensland, proponents are prohibited from using additives

containing BTEX compounds. The NSW Environment Protection Authority may take samples of CSG fracture stimulation additives at any time to verify compliance.205 Additionally, under the Code of Practice, proponents must undertake risk assessment before each fracture stimulation, assessing the effects on public safety, land contamination, air pollution, noise and vibration, loss of well integrity, induced ground movements or seismicity and conflicts with existing land uses.

VICTORIA The Victorian government has placed a moratorium on approvals for fraccing in Victoria. The ban will remain in place until at least July 2015 while a formal community consultation process in relation to onshore gas extraction is conducted.206 One of the five areas of focus of the community consultation process is to develop a better understanding of the technologies and processes for extracting onshore gas, including drilling and hydraulic fracturing processes and their impacts.207

WESTERN AUSTRALIAFraccing is permitted in Western Australia if the State government is satisfied a proposal for fraccing operations complies with the relevant

legislation, including legislation relating to public health, the environment and water resources.208

Any operator wishing to perform fraccing activities must submit to the Western Australian government information about the scale of the program, distances from nearest aquifer(s), all chemical additives used, volumes, management and disposal of water, integrity of well casings, fracture modelling and monitoring of fraccing, and long term monitoring to determine whether chemical contamination is an issue.209

SOUTH AUSTRALIABefore a proponent can undertake fracture stimulation activities in South Australia, it must have an Environmental Impact Report and an approved Statement of Environmental Objectives. The Environmental Impact Report must identify all potential risks and the appropriate risk mitigation and monitoring strategies to be implemented. The Statement of Environmental Objectives must identify objectives that will address the risks outlined in the Environmental Impact Report, and the criteria to be used to assess the achievement of the objectives.210


COMPETITION LAWAustralia’s competition laws and regulations are relevant to many businesses participating in the Australian oil and gas industry. Mergers and acquisitions, joint ventures, infrastructure investments and marketing arrangements may raise competition issues.

Cartel conduct is generally prohibited under the Competition and Consumer Act 2010 (Cth). However, there are very specific circumstances in which cartel arrangements may be allowed. For example, there is a limited exception in relation to certain types of joint

venture arrangements. Alternatively, an entity may apply to the ACCC for formal authorisation of a proposed cartel agreement or arrangement. The ACCC’s conditional authorisation of the joint marketing and sale of natural gas produced by the North West Shelf Gas Project is an example of such authorisation.211

Access to regulated infrastructure, including certain gas pipelines in Australia, may also raise competition issues which may need to be considered when investing in Australian oil and gas projects.

ROYALTIES AND TAXATION


When examining any investment in the Australian petroleum industry, whether it is by way of the acquisition of an interest in a company which owns an oil and gas project, or the acquisition of a direct interest in the assets and business of the oil and gas project, it is necessary to consider the impact of the Australian royalty and taxation regimes in relation to the acquisition and the ongoing conduct of the oil and gas activities.

ROYALTIESIn Australia, petroleum is the property of the State (subject to minor exceptions). This means that the relevant State or Territory has the right to grant petroleum exploration and production licences and to impose royalties on petroleum produced from such licences. Accordingly, royalties can be imposed by a State or Territory government if petroleum production occurs within the territorial borders of the relevant State or Territory.

The State based royalties in the major petroleum producing jurisdictions are:

• in Queensland – a royalty of 10% of wellhead value;

• in South Australia – a royalty of 10% of wellhead value; and

• in Western Australia – a royalty of 10 - 12.5% of wellhead value.

Royalties are also payable to the Federal Government for offshore

petroleum production in the North West Shelf project area. The royalty rate for the North West Shelf project area is set between 10% - 12.5% of the wellhead value, depending on the size of the area covered by the petroleum production licence, and is shared between the Federal and Western Australian Governments.212 From 1 July 2012, the Federal Petroleum Resource Rent Tax (PRRT) has also applied to the North West Shelf.

TAXATION IN AUSTRALIA The Australian taxation system is sophisticated and complex in terms of both its coverage and administration and cannot be explained briefly without omitting some details. The taxation system in Australia has also undergone, and is likely to continue to undergo, significant reform. Accordingly, the following comments should only be used as a guide to the range of tax imposts that are commonly relevant in conducting business operations in Australia. Foreign investors also need to consider the tax regime in their home jurisdiction and any Double Taxation Agreement (DTA) between Australia and that jurisdiction.

Each level of Government (Federal, State/Territory and Local) imposes its own taxes. The Federal Government imposes the most significant taxes. It levies:

• income tax (on “taxable income”, which includes capital gains);

• Fringe Benefits Tax (FBT) (on non-cash benefits provided to employees and their associates);

• Goods and Services Tax (GST) (a consumption tax levied on “supplies” of most goods and services; and

• customs and excise duties (on certain products including fuel).

State, Territory and Local governments do not impose taxes on income or capital gains. However, each State and Territory Government raises revenues by imposing various charges such as stamp duty, payroll tax and land tax. Each Local Government levies annual charges (“rates”) on the owners of land in its jurisdiction.

INCOME TAXNon-residents of Australia (including foreign companies) are, ordinarily, only taxed on income derived from sources in Australia and capital gains made from dealing with

certain assets that have a substantial connection with Australia such as the sale of Australian real property (held directly or, in some cases, indirectly).

Residents of Australia (including Australian companies) are taxed on their worldwide income (that is, from sources both in and outside Australia).

A company incorporated in Australia, or which carries on business in Australia and has its central management and control in Australia or its voting power controlled by shareholders who are residents of Australia, will be a resident of Australia for tax purposes.

Income tax is levied on taxable income. Taxable income is the product of a taxpayer’s assessable income less any allowable deductions. Assessable income includes “ordinary income” (eg. business and investment income) and “statutory income” (eg. capital gains). In broad terms, allowable deductions include any expenditure incurred in gaining or producing assessable income or in carrying on a business for that purpose. Where allowable deductions exceed assessable income for a year of income, a taxpayer incurs a tax loss. In general, tax losses from prior years can be carried forward indefinitely. For companies, a tax loss may only be deducted when determining the company’s future taxable income if the company satisfies the “continuity of ownership” test or, in some cases, the “same business” test. Capital losses can only be offset against capital gains arising in the same or future tax years. The ability to utilise tax losses may be impacted by a company’s entry into the tax consolidation regime.

Although company groups are not generally regulated as groups from a legal perspective and are treated as individual companies, some

company groups may be treated as a single entity for income tax purposes under the Australian tax consolidation regime.

Consolidation regime

Wholly-owned groups of Australian resident entities (including companies, partnerships and trusts, but excluding branches) may elect to form a consolidated group for Australian income tax purposes. The choice is a “one-in-all-in” and irrevocable election. The formation of a tax consolidated group will not have any impact on the status of the group members for the purposes of other Australian taxes.

The principal benefits of forming a tax consolidated group include the lodgement of only one Australian income tax return on behalf of the group, the ability to effectively disregard (for income tax purposes) any intra-group transactions (ie asset transfers, loans, payments of dividends, returns of capital) and the effective offset of losses attributable to the operations of a group member against the income generated by other group members.

There are special rules that give foreign-owned groups which have entry points into Australia via multiple Australian holding companies flexibility in defining the consolidated group.

The Australian head company for the tax consolidated group is responsible for lodgement of the income tax return for the group and for paying the group’s income tax liability. However, the other members of the group can be jointly and severally liable for the tax liabilities of the group if the head company defaults in paying those liabilities to the ATO. The risk of joint and several liability can be mitigated if all the members of the group execute a valid tax sharing agreement

which (notionally) allocates the tax liabilities of the group to each of its members on a reasonable basis. In such circumstances, an individual member’s liability if the head company defaults will be limited to its allocation of the income tax liability of the group as determined under the tax sharing agreement.

Tax on capital gains from the disposal of assets

The Australian capital gains tax (CGT) rules will generally include net capital gains (after offsetting any capital losses) in a taxpayer’s assessable income.

By way of example, a capital gain will arise where the capital proceeds in relation to the disposal of a capital asset exceeds the cost base of that asset. A capital loss will be realised if the capital proceeds are less than the reduced cost base (effectively the cost base subject to some modifications) of the asset. Entities other than companies (eg trusts) may also be entitled to apply the 50% CGT discount to reduce the amount of a capital gain that may otherwise be included in assessable income.

The Australian CGT rules apply differently to residents and non-residents of Australia.

Australian residents are generally subject to Australian tax under the CGT rules in respect of capital gains derived in relation to their worldwide assets. However, capital gains on shares held in non-resident companies can be disregarded for CGT purposes to the extent that the non-resident company has an underlying active business.

Non-residents of Australia can generally disregard any capital gains or capital losses for the purposes of the Australian CGT rules. The exception to this principle is where a CGT event occurs in relation to



a limited class of assets known as “taxable Australian property”. In broad terms, this includes Australian real property, leases of real property and mining, quarrying or prospecting rights and indirect interests in any of these assets (effectively non-portfolio interests in interposed entities in respect of which the value is principally attributable to these assets in Australia).

Because the CGT rules include net capital gains in assessable income, they are generally subject to Australian tax at ordinary income tax rates. Adjustments for inflation may be made to assets acquired prior to 30 September 1999, but is frozen at that date. Capital losses are calculated without taking into account any inflation adjustment.

Rates of income tax

The current rate of tax for both resident and non-resident companies is 30%. The Federal Government has proposed an aspirational target of reducing the company tax rate to 28.5% by 1 July 2015 (although there is a current proposal to impose a 1.5% levy on certain large companies to fund the Federal government’s proposed paid parental leave scheme).

Thin capitalisation

Deductions for interest incurred by an inbound investment vehicle (which can include an Australian company 40% or more of whose shares are owned by a non-resident) may be limited under the Australian thin capitalisation rules. Broadly speaking, a portion of interest (and related expenses) will be denied as a deduction if the average debt of the Australian entity or operations exceeds 75% of the average assets of that entity, or the entity’s Australian operations. This is known as the “safe harbour” test. However,

deductions relating to debt in excess of this level may be allowed if the entity can establish that an arm’s length lender would have lent a higher amount to the entity, considered on a stand-alone basis (ie the “arm’s length debt” test). It is important to note that even if the level of debt satisfies the safe harbour test, interest deductions may still be denied under the transfer pricing rules if the interest rate is not arm’s length.

The Australian thin capitalisation rules are the subject of current proposals for reform. If enacted, those reforms would result in the safe harbour test being reduced from 75% to 60% of average assets. The Board of Taxation has also been tasked with reviewing the arm’s length debt test and making recommendations regarding its reform and is due to report to the Federal Government in December 2014.

Debt / equity rules

Complex rules affect the taxation treatment of a variety of financial instruments. Under these rules, taxpayers are required to apply certain tests to determine whether an instrument will be classified as debt or equity for taxation purposes. The rules are designed to replicate the economic characterisation of an instrument and may, in some circumstances, differ from the accounting treatment of an instrument as being debt or equity.

Instruments which take the legal form of debt may be classified as equity for Australian taxation purposes and, as a result, payments of interest could be treated as dividends and may not be deductible. There may also be implications under the rules relating to the imputation of dividends.

Alternatively, instruments which take the legal form of equity

might be classified as debt for tax purposes. In such circumstances dividends paid will be treated as interest (and potentially deductible), but will not be able to be franked. The classification of an instrument as either debt or equity will also be a relevant consideration for a taxpayer’s thin capitalisation analysis.

The debt/equity rules are the subject of a broad ranging review being conducted by the Board of Taxation. The results of that review are due to be reported to the Federal Government in March 2015.

Transfer pricing

Where applicable, the Australian transfer pricing rules require adjustments to profits of an Australian taxpayer if it is not dealing at arm’s length (including as to pricing) with foreign parties (related or unrelated). The transfer pricing rules can apply to arrangements in respect of the provision or acquisition of services, goods and financing. There are special rules allowing adjustments to be made to interest deductions under the transfer pricing rules even where the level of debt is within the thin capitalisation safe harbour. Broadly, Australia’s transfer pricing regime is intended to reflect Article 9 of the OECD Model Tax Convention and the OECD Guidelines

IMPUTATION OF DIVIDENDSAn imputation system applies to the taxation of companies resident in Australia and their shareholders.

Under this system, the payment of company tax gives rise to credits in the company’s “franking” account. These credits can be attached to dividends paid by the company. Australian shareholders in receipt of these “franked” dividends can

generally claim the credits against their own income tax liabilities.

Non-resident shareholders are not entitled to any credit or refund of the imputation credit in respect of franked dividends, but the fact that a dividend is franked does impact on whether Australian dividend withholding tax would apply to the payment of that dividend to non-resident shareholders.

WITHHOLDING TAXAustralian withholding tax can be imposed on dividends, interest and royalties paid by residents of Australia to non-residents. Under domestic law, the withholding tax rates are generally 30% on dividends and royalties and 10% on interest. However, if Australia has a DTA with the country in which the non-resident recipient resides, any lower rate specified in the DTA applies. Australia has a comprehensive DTA network covering most of its major trading partners, including China, Korea, India, Japan, the United States and the United Kingdom. A notable exception is Hong Kong which is not covered by the agreement with China. Under most DTAs, the rate on dividends is at least reduced to 15% (China, Korea and India) and may be reduced further to nil or 5% in others (United States and United Kingdom) depending on the circumstances. The rate on royalties may be reduced to 5% (Japan, United States and United Kingdom), 10% (China and India) or 15% (Korea). Notwithstanding the above, no Australian dividend withholding tax will apply to the extent a dividend paid to a non-resident is franked under the Australian imputation system.There is no branch profits remittance tax in Australia.Certain other payments made to foreign residents that do not have

a permanent presence in Australia may also be subject to Australian withholding tax. These include payments for entertainment, sports activities and construction, installation and upgrade of buildings, plant and fixtures.

Employers must also make PAYG withholding deductions from salaries or wages paid to employees, which are then remitted to the ATO.

GSTIn general, the supplier of goods or services is required to remit GST to the ATO equal to 10% of the value of the goods or services supplied. An “input tax credit” will generally be available to a business that purchases goods or services for the GST component of the purchase price where both the recipient and supplier of the goods or services are registered for GST and a “tax invoice” has been provided to the recipient.

GST is also payable upon the importation of goods into Australia (usually by the importer). Some supplies are “GST-free”, eg. the sale of a business as a going concern, and no GST applies. Other supplies may be “input taxed” (eg. the acquisition of shares in a company) and will not be subject to GST, but input tax credits may be denied in whole or in part for the GST component on associated acquisitions.

A business is required to register for GST if it has an annual turnover of A$75,000 or more. A branch of a foreign company is entitled to be registered for GST purposes. Businesses are required to account for GST to the ATO by lodging a Business Activity Statement monthly or quarterly (depending on the turnover of the business).

Entities in a GST group or GST joint venture can enter an indirect tax sharing agreement (ITSA) to allow

the GST group to allocate its indirect tax liability to individual members of the group. An ITSA provides entities with the flexibility to determine an appropriate basis of allocation that suits the circumstances of the GST group or GST joint venture. It will also mitigate the risk of joint and several liability for the GST liabilities of a GST group if the representative member of that group defaults in respect of the payment of those liabilities to the ATO.

The liability for paying the GST is generally imposed on the supplier. Therefore, the supplier should determine its prices to take account of GST, or there should be a GST clause in all contractual arrangements which allows the supplier of a taxable supply to pass on its GST liability to the recipient.

STAMP DUTYStamp duty is levied by the various State and Territory Governments and is payable on certain “dutiable transactions”, such as the transfer of certain assets (ie land, business assets etc). The stamp duty rules vary to a great extent between the State and Territory jurisdictions.

Marketable securities duty applies to the transfer of shares in unlisted companies incorporated in New South Wales or South Australia. The rate of duty chargeable is 60 cents per $100, or part thereof, of the dutiable value of the shares.

Each State and Territory imposes stamp duty on the direct transfer of interests in land. However, an indirect transfer of an interest in land (which can, depending on the jurisdiction, include fixtures, chattels, mining leases and rights) may also be subject to landholder duty (or land rich duty in Tasmania). In general terms, landholder/land rich duty will be imposed on



an acquirer which acquires (or increases) a “significant interest” (generally 50% or more) in a “landholder” based on the value of the interest in land held. The tests and thresholds which apply for determining when an entity is a landholder, and when a significant interest has been acquired, varies between each jurisdiction, as well as by entity type.

PRRTThe PRRT is a Federal tax and is imposed under the Petroleum Resource Rent Tax Assessment Act 1987 (Cth). Since 1 July 2012, PRRT has applied to petroleum projects within Federal government waters (including the North West Shelf) and onshore projects (including coal seam gas, oil shale projects etc). The extended application of the PRRT may be impacted depending on any measures introduced by the Federal government to repeal the Mineral Resources Rent Tax.

PRRT is levied on a project by project basis. An entity will be liable for PRRT in respect of its “interest” (ie its entitlement to receive receipts from the sale of petroleum recovered in relation to the project) in a petroleum project.

PRRT is applied at the rate of 40% of the “taxable profit” of a project, which is broadly the assessable receipts of the project less the deductible expenditures and certain exploration expenditures transferred from another project. Deductible expenditure can include capital expenditure. Accordingly, PRRT is not payable until such time as the project has earned taxable profit.

For PRRT purposes, petroleum is valued at the point (or each point) at which a marketable petroleum commodity has been produced (ie crude oil, condensate, liquefied petroleum gas or ethane). Value-addition beyond that point (such as liquefaction of gas into LNG) is generally not subject to PRRT.

CARBON PRICINGOn 1 July 2012 the Clean Energy Act 2011 (Cth) (Clean Energy Act) commenced operation. Under the Clean Energy Act any party that has operational control of a facility which directly releases more than 25,000 tonnes of carbon dioxide equivalents and large suppliers of natural gas are required to purchase one carbon unit for every tonne of carbon dioxide equivalent they emit and surrender that permit to the Government. The

fixed price of the permits started at A$23 per tonne and increased to A$24.15 on 1 July 2013.

However, following the 2013 federal election, the Federal Government proposed to abolish the carbon pricing regime from 1 July 2014 and introduced a series of Bills to Federal parliament to achieve this, although these Bills were subsequently defeated by the Senate. In its place, the Federal Government proposes to institute an Emissions Reduction Fund as part of a Direct Action Plan to reduce greenhouse gas emissions. The Australian Government released a Green Paper on 20 December 2013 outlining possible design options for the Emissions Reduction Fund and sought public submissions in relation to those options. In broad terms, the Emissions Reduction Fund will provide incentives for emissions abatement activity throughout the Australian economy. Further policy development and reform activity is expected in this regard.

EMPLOYMENT RELATIONS AND

SKILLED LABOUR


MINIMUM EMPLOYMENT ENTITLEMENTS IN THE PETROLEUM INDUSTRYThe Fair Work Act 2009 (Cth) (FW Act) is the primary piece of legislation governing employment in Australia. It applies to most employees in Australia, other than certain State public sector employees. The legislation establishes a number of instruments that determine the terms and conditions of employment for employees, including those engaged in the petroleum industry.

National employment standards

The FW Act contains ten minimum standards of employment known as the National Employment Standards (NES) which apply to all employees covered by the FW Act (including executives). These minimum standards relate to 4 weeks’ annual leave (5 weeks for shift workers), 10 days’ personal/carer’s leave, and compassionate leave, community service leave, unpaid parental leave, public holidays, long service leave, notice of termination and redundancy pay, reasonable maximum working hours, flexible working arrangements and the provision of an information statement to all new employees.

Modern awards

The FW Act also provides for instruments known as “modern awards” to be made and updated by the Fair Work Commission (FWC) (Australia’s principal industrial tribunal). Modern awards apply on an industry or occupation specific basis and supplement the minimum standards contained in the NES. The key modern awards in the petroleum industry include the Hydrocarbons

Industry (Upstream) Award 2010, the Hydrocarbons Field Geologists Award 2010, the Maritime Offshore Oil and Gas Award 2010 and the Oil Refining and Manufacturing Award 2010.

Modern awards are not intended to cover managers or senior employees, though some modern awards contain classifications that may capture such employees.

Enterprise agreements

The FW Act promotes bargaining at an enterprise level, and protects the role of trade unions in that process by allowing employers, employees and trade unions to negotiate terms and conditions of an agreement that applies specifically to the particular enterprise. Enterprise agreements are widely used throughout the petroleum sector, and provide the flexibility to determine site and/or employer specific terms and conditions of employment. Enterprise agreements typically operate for a period of three to four years, but will continue to operate until they are replaced or terminated.

In order to approve an enterprise agreement, the FWC must be satisfied it passes the “better off overall test”. This requires that each employee covered by the enterprise agreement is, on balance, better off than they would be under the modern award that would otherwise apply to the employee’s employment.

Generally, the terms of a modern award will not apply to an employee covered by an enterprise agreement while the agreement is in operation.

Under the FW Act collective bargaining regime:

• employers may be required to collectively bargain for an enterprise agreement with their employees where the majority of their employees wish to do so;

• employees have the right to appoint a bargaining representative to undertake bargaining on their behalf. If an employee does not appoint a bargaining representative and is a member of a trade union, the trade union will be the default bargaining representative for the employee;

• employers, trade unions and employee representatives are required to bargain “in good faith”; and

• there are a range of measures that bargaining parties can utilise when bargaining becomes contested or contentious. This includes narrow circumstances in which strikes or other industrial action can lawfully be taken in support of claims made during negotiations (which is known as “protected industrial action”).

There has been a significant amount of industrial action in the petroleum industry recently, particularly from the Maritime Union of Australia, which controls labour supply to offshore gas vessels and is known for its militancy and ambitious wage demands. This has resulted in caution from major oil and gas operators and producers, as they seek to limit their exposure to industrial action, partly by sharing the risk with contractors.

Where a company is establishing a new business or undertaking in Australia, it may be possible to enter into a “greenfields agreement” with one or more trade unions prior to employing any employees needed to conduct the business. This type of agreement allows an employer to conclude its terms without the risk of industrial action disturbing the commencement phase of a new project.

However, one of the major concerns for oil and gas companies in

Australia is the deadlock that often arises between employers and unions during the negotiation of greenfields agreements, delaying the commencement of new projects. The Federal Government has proposed amendments to the FW Act to address this issue, including by providing a three month window within which greenfields enterprise agreements must be concluded or the FWC may approve an agreement if it is satisfied the agreement provides for pay and conditions consistent with the prevailing pay and conditions within the relevant industry for equivalent work.

LONG SERVICE LEAVEIn addition to the minimum entitlements set out in the NES, legislation in the States and Territories provide a general entitlement to long service leave for all employees who have completed the specified period of continuous service with their employer (with a pro-rata amount payable after a shorter period in some certain circumstances). Enterprise agreements can also provide for additional long service leave entitlements.

Some jurisdictions also have industry-specific long service leave laws. While there are no petroleum industry long service leave laws in Australia, employees working on particular aspects of a petroleum project may have the benefit of other industry-specific long service leave laws. For example, employees involved in the construction of petroleum projects in Western Australia may be entitled to long service leave under the Construction Industry Portable Paid Long Service Leave Act 1985 (WA).

INDUSTRIAL RELATIONS AND UNION ENGAGEMENTThe FW Act sets out a detailed framework for industrial relations issues, including powers to hear and determine disputes, to make orders suspending or stopping strikes and other forms of industrial action and to take other steps to intervene in and facilitate collective bargaining. The FWC has a key role in enforcing these laws.

Trade unions that are eligible to represent the industrial interests of employees in a workplace will also be entitled to enter that workplace to hold discussions with employees and to investigate suspected breaches of legislation, awards or agreements. Union representatives also have a right in certain circumstances to enter workplaces where they have concerns regarding the health and safety of employees at the workplace.

EMPLOYMENT PROTECTIONSThe FW Act provides protection from unfair dismissal in certain circumstances, including if a modern award or enterprise agreement covers the employee and the employee has over six months’ service or 12 months’ service if their employer is a small business. Senior or high income earners generally cannot access unfair dismissal, although there are exceptions.

There are also a range of protections contained in the FW Act prohibiting adversely affecting employees and others (including prospective employees) for reasons including a person’s workplace rights, industrial activity and grounds of

discrimination. Prohibitions on discrimination in employment also exist in other Federal and State legislation.

TRANSFER OF BUSINESS The FW Act contains rules that apply when there is a “transfer of business”, such as when there is a transfer of assets from one employer to another. Generally speaking, if there is a transfer of business, the industrial instruments that applied to an employee who transfers their employment will continue to apply to the employee and bind the new employer. The new employer may also be required to recognise the continuous service and leave entitlements the employee accrued while working for the old employer.

HEALTH AND SAFETYHealth and safety in the petroleum industry is governed by a range of legislation at both State and Federal levels.

In most States and Territories, the onshore petroleum industry is subject to recently enacted nationally harmonised work health and safety legislation (WHS Laws). Under the WHS Laws, there is a primary duty placed on persons conducting a business or undertaking (PCBUs) to ensure the health and safety of people at workplaces (whether employees or other workers, visitors or members of the public), and people affected by the PCBUs’ business or undertaking, so far as is reasonably practicable. The WHS Laws are backed by criminal penalties for non-complying companies, and in certain circumstances their directors and/or managers.

EMPLOYMENT RELATIONS AND SKILLED LABOUR


Some States and Territories also have health and safety legislation that applies specifically to the petroleum industry, such as the Petroleum and Gas (Production and Safety Act) 2004 (Qld) and the Petroleum and Geothermal Energy Resources Act 1967 (WA). This legislation applies to the exclusion of the general health and safety laws in certain circumstances.

The Offshore Petroleum and Greenhouse Gas Storage Act 2006 (Cth) also places health and safety obligations on participants in the offshore petroleum industry (such as operators of offshore facilities, employees, contractors or other persons at those facilities, and their designers and manufacturers). This legislation also requires the taking of all reasonably practicable steps to ensure that offshore petroleum facilities, and all activities carried out in connection with them, are safe and without risk to the health of any person.

WORKERS’ COMPENSATIONLegislation in each State and Territory requires employers to hold workers’ compensation insurance for their workers, which includes their employees and, in some circumstances, independent contractors. Workers’ compensation insurance provides payments of compensation to workers for any time off work as a result of an injury sustained in the course of their employment, and any medical costs that arise as a result of the injury.

EMPLOYMENT OF FOREIGN WORKERSThe ability to deal with capacity constraints and address skill shortages is a key challenge for the Australian petroleum industry and so the regulation of business migration is a key issue.

Australian or overseas businesses can apply to sponsor an overseas skilled worker to fill nominated positions in Australia on a temporary basis if they cannot find an appropriately skilled Australian citizen or permanent resident to fill the position.

The Department of Immigration and Citizenship can issue a Temporary Work (Skilled) – Standard Business Sponsorship (Subclass 457) visa (subclass 457 visa) to skilled workers from outside Australia for this purpose. A subclass 457 visa is valid for a period of up to four years.

The employer sponsor must ensure that the terms and conditions of employment provided to a sponsored person are no less favourable than the terms and conditions the employer provides, or would provide, to an Australian citizen or Australian permanent resident to perform work in an equivalent position in the employer’s workplace at the same location.

This includes paying market salary rates to overseas workers. In the petroleum industry, workers on subclass 457 visas are mostly business and science professionals, managers and engineers, but also include tradespeople such as fitters, machinists, welders and electricians.

DUE DILIGENCE ON AUSTRALIAN OIL

AND GAS PROJECTS


Due diligence is an important part of any M&A transaction in the petroleum sector in Australia.

Foreign buyers who have purchased petroleum interests in other parts of the world will find that due diligence in the Australian context is very similar to due diligence on a petroleum transaction elsewhere in the world.

Due diligence on a potential acquisition of a petroleum interest will typically cover:

• technical matters (such as resource quality and quantity, geological and geotechnical conditions, infrastructure, etc);

• commercial / financial matters;

• accounting / tax matters; and

• legal matters.

Buyers will typically draw upon expertise from within their own organisation, and supplement that with suitably qualified external advisers, to assist in the conduct of due diligence across each of the above areas.

LEGAL DUE DILIGENCEThe results of the legal due diligence will rarely be the deciding factor in the final decision to proceed or not proceed with a transaction. However, the conduct of legal due diligence is nevertheless a very important part of an M&A transaction, because legal due diligence will often uncover issues which:

• have a timing, value or risk impact (and therefore need to be taken into account in the financial model);

• need to be addressed in some way in the sale or bid documentation (in the case of a private M&A deal as a condition precedent,

indemnity, warranty or purchase price adjustment and in the case of public M&A as a walk away right); or

• need to be addressed, following completion of the acquisition, as an implementation or integration issue.

A foreign buyer should discuss with its lawyers, and clearly agree upfront, the scope of the legal due diligence that is to be carried out having regard to the objectives of the buyer and the nature of the acquisition. This would include agreement on a materiality threshold (if any), the documents to be reviewed, the searches to be carried out, any legal advice to be provided, and the form of due diligence report to be provided (for example, a short-form ‘exceptions based’ report, or a long-form full legal due diligence report).

Foreign buyers should also agree with their lawyers whether they will be looking after tax, stamp duty and insurance issues. Often foreign buyers will have separate accounting and tax advisers who will look after tax and stamp duty issues, and separate insurance advisers who will look after insurance issues, so it is best to be clear about this up front.

Where the seller has prepared a data room containing information about the relevant oil and gas project, the foreign buyer should agree with their lawyers which documents, or categories of documents, in the data room the lawyers are to review. Where the seller has not prepared a data room, lawyers should help the buyer prepare a list of the information and documents that the foreign buyer should ask to see as part of their due diligence

investigations. It may be in the context of a listed company that any due diligence is limited to publicly available information including information sourced from ASX announcements.

In addition, the foreign buyer’s lawyers should recommend the searches of public registers that should be carried out.

As the legal due diligence progresses, the foreign buyer’s lawyers will typically identify ‘gaps’ in the available information, and will submit questions to the seller or its advisers to obtain additional information to help fill the gaps.

Where possible, the legal structure of the proposed transaction should be resolved before the conduct of the due diligence, because the transaction structure will impact on aspects of the accounting, tax and legal due diligence. However, it is not always possible to resolve the structure before the due diligence commences, and often the results of the due diligence will influence the choice of transaction structure.

When carrying out legal due diligence on an oil and gas project, the foreign buyer’s lawyers will generally need to review materials relating to:

• corporate matters (although the extent of the records that need to be reviewed will depend upon the structure of the sale transaction and the number of corporate entities involved);

• farmin/farmout, joint venture or shareholder arrangements (where the project is owned by multiple parties);

• off-take and marketing / sales agency arrangements;

• infrastructure and services;

• private royalty (or commission) agreements;

• the supply of equipment, spares and consumables;

• the construction, operation and maintenance of the project;

• petroleum tenures;

• environmental issues;

• other Governmental licences, permits and approvals;

• land tenure and landowner consents and compensation;

• native title;

• cultural heritage;

• employee, safety and superannuation (ie pension) matters;

• existing or threatened legal claims; and

• intellectual property and information technology.

In addition to reviewing materials provided by the seller which cover the areas outlined above, the foreign buyer’s lawyers will generally recommend that they carry out a variety of searches, such as:

• company searches (of the seller and each other relevant corporate entity);

• petroleum tenure searches (for each relevant exploration licence and petroleum lease, and for overlapping mining, greenhouse gas storage or geothermal licenses);

• land tenure searches (for each parcel of land that is owned by the seller or project, or which underlies the petroleum leases);

• native title searches;

• cultural heritage searches;

• environmental searches; and

• court searches.

Upon completion of the review of the legal due diligence materials the foreign buyer’s lawyers will prepare a written legal due diligence report. This might be a short-form ‘exceptions based’ report, or a long-form full legal due diligence report, depending upon what the foreign buyer has agreed with their lawyers.

A full legal due diligence report will be much more detailed, and therefore longer, than an exceptions based report, and will contain more background information which can be helpful to a buyer who is not familiar with the legal and regulatory regime which governs oil and gas projects in Australia.

Irrespective of whether the legal due diligence report is a short form or long form report, it should clearly set out issues identified by the lawyers that the foreign buyer may wish to address in the sale documentation, and the lawyers should recommend how each of those issues can be addressed. For example, in the case of private M&A deal the lawyers may recommend that a specific condition precedent, indemnity or warranty be included in the sale agreement to address an issue.

DUE DILIGENCE ON AUSTRALIAN OIL AND GAS PROJECTS


CORRS TEAM

PETER JAROSEK

BRUCE ADKINS

RUSSELL PHILIP

JAMES MINCHINTON

CHRISTIAN OWEN

PAUL CARELESS

STUART CLAGUE

MICHAEL MACGINLEY

Partner – Perth M&A, Project DevelopmentTel + 61 8 9460 1804Mob + 61 (0) 420 856 [email protected]

Partner – Brisbane M&A, Project DevelopmentTel + 61 7 3228 9431Mob + 61 (0) 418 874 [email protected]

Partner – Perth M&ATel + 61 8 9460 1673Mob + 61 (0) 400 299 [email protected]

Partner – BrisbaneM&A, Project DevelopmentTel + 61 7 3228 9875Mob + 61 (0) 420 907 [email protected]

Partner – Perth M&ATel + 61 8 9460 1708Mob + 61 (0) 400 299 [email protected]

Special Counsel - BrisbaneM&A, Project DevelopmentTel +61 7 3228 [email protected]

Special Counsel - BrisbaneM&A, Project DevelopmentTel +61 7 3228 [email protected]

Partner – Brisbane M&A, Project DevelopmentTel + 61 7 3228 9391Mob + 61 (0) 417 621 [email protected]

OIL AND GAS TEAM:

LIZZIE KNIGHT

Partner – SydneyM&A, Project DevelopmentTel + 61 3 9672 3366Mob + 61 (0) 402 793 [email protected]

HENRY PROKUDAPartner – Brisbane Environment, Native Title & Cultural HeritageTel + 61 7 3228 9791Mob + 61 (0) 417 720 [email protected]

FRANCES WHEELAHAN

EDDIE SCUDERI

CHRISTINE COVINGTON

CHRIS RYDER DAVID ABERNETHY

ANDREW CHEW

LOUISE CAMENZULI

PETER SCHENK NICK LE MARE

Partner – MelbourneIntellectual PropertyTel + 61 3 9672 3380Mob + 61 (0) 419 517 [email protected]

Partner – BrisbaneIPT&CTel + 61 7 3228 9319Mob + 61 (0) 419 731 [email protected]

Partner – Sydney EnvironmentTel + 61 2 9210 6428Mob + 61 (0) 419 607 [email protected]

Partner – Perth Construction / ContractsTel + 61 8 9460 1606Mob + 61 (0) 412 555 [email protected]

Partner – Brisbane Industrial Relations / OH&STel + 61 7 3228 9456Mob + 61 (0) 419 022 [email protected] Duci odis

Partner – Sydney Construction / ContractsTel + 61 2 9210 6607Mob + 61 (0) 407 453 [email protected]

Partner – Sydney EnvironmentTel + 61 2 9210 6621Mob + 61 (0) 412 836 [email protected]

Partner – Brisbane Construction / ContractsTel + 61 7 3228 9869Mob + 61 (0) 419 641 [email protected]

Partner – Brisbane Industrial Relations / OH&STel + 61 7 3228 9786Mob + 61 (0) 428 556 [email protected]

JACK DE FLAMINGH

Partner – Sydney Industrial Relations / OH&STel + 61 2 9210 6192Mob + 61 (0) 403 222 [email protected]


CLARE CORKE

STEPHANIE DAVESON

LIMING HUANG

LINDA HUAN

REYNAH TANG

RHYS JEWELL

ANDREW LUMSDEN

Partner – Melbourne FinanceTel + 61 3 9672 3255Mob + 61 (0) 405 275 [email protected]

Partner – Brisbane M&ATel + 61 7 3228 9493Mob + 61 (0) 438 787 [email protected]

Special Counsel – Melbourne Corporate AdvisoryTel + 61 3 9672 3132Mob + 61 (0) 450 679 [email protected]

Associate – Brisbane Corporate AdvisoryTel + 61 7 3228 9549Mob + 61 (0) 402 639 888 [email protected]

Partner – Melbourne TaxationTel + 61 3 9672 3535Mob + 61 (0) 417 586 [email protected]

Special Counsel– Melbourne TaxationTel + 61 3 9672 3455Mob + 61 (0) 407 318 [email protected]

Partner – Sydney M&ATel + 61 2 9210 6385Mob + 61 (0) 418 110 [email protected]

CHINA BUSINESS GROUP:

GLOSSARY OF TERMS

ACCC Australian Competition and Consumer Commission

ARI Advanced Resources International

APPEA Australian Petroleum Production & Exploration Association

ASX Australian Securities Exchange

ATO Australian Taxation Office

bopd Barrels of oil per day

BREE Bureau of Resources and Energy Economics

BTEX Benzene, toluene, ethylbenzene and xylene

CGT Capital Gains Tax

Clean Energy Act Clean Energy Act 2011 (Cth)

Corporations Act Corporations Act 2001 (Cth)

CSG Coal seam gas

CSIRO Commonwealth Scientific and Industrial Research Organisation

DNRM Department of Natural Resources and Mines (Queensland)

DTA Double Taxation Agreement

EA Environmental approval or authority

EIS Environmental Impact Statement

EPBC Act Environment Protection and Biodiversity Conservation Act 1999 (Cth)

FATA Foreign Acquisitions and Takeovers Act 1975 (Cth)

FBT Fringe Benefits Tax

FIRB Foreign Investment Review Board

FLNG Floating liquefied natural gas

FW Act Fair Work Act 2009 (Cth)

GST Goods and Services Tax


ISP Independent Scientific Panel

ITSA Indirect tax sharing agreement

LNG Liquefied natural gas

LPG Liquefied petroleum gas

M&A Mergers and acquisitions

Mmbbl Million barrels

Mmboe Million barrels of oil equivalent

Mmcf Million cubic feet

Mtpa Million tonnes per annum

NES National Employment Standards

NTA Native Title Act 1993 (Cth)

OPGGS Act Offshore Petroleum and Greenhouse Gas Storage Act 2006 (Cth)

PAYG Pay-As-You-Go

PRRT Petroleum Resources Rent Tax

SCL Strategic cropping land

SCL Act Strategic Cropping Land Act 2011 (Qld)

Tcf Trillion cubic feet

UCG Underground Coal Gasification

FOOTNOTES

1 APPEA, Australian LNG Projects, http://www.appea.com.au/oil-gas-explained/operation/australian-lng-projects/ (accessed 26 May 2014).

2 Queensland Government, Community and Landholder Information, http://www.ehp.qld.gov.au/management/non-mining/community-landholder.html (accessed 26 May 2014).

3 World Economic Forum, The Global Competitiveness Report 2013-2014 (September 2013), http://www3.weforum.org/docs/WEF_GlobalCompetitivenessReport_2013-14.pdf page 15.

4 World Economic Forum, The Global Competitiveness Report 2013-2014 (September 2013), http://www3.weforum.org/docs/WEF_GlobalCompetitivenessReport_2013-14.pdf pages 15, 31.

5 International Monetary Fund, World Economic Outlook (April 2014), http://www.imf.org/external/Pubs/ft/weo/2014/01/pdf/text.pdf page 58.

6 Ibid, page 2.

7 Australian Government Department of Foreign Affairs and Trade, Australia’s Trade Agreements, http://www.dfat.gov.au/fta/ (accessed 11 March 2014).

8 Committee for Economic Development of Australia, Australia’s Unconventional Energy Options – September 2012, http://ceda.com.au/media/263565/cedaunconventionalenergyfinal.pdf page 7.

9 Otherwise known as CSG, coal bed methane or coal seam methane.

10 Australian Government, Australian Gas Resource Assessment 2012, http://www.ga.gov.au/about-us/news-media/news-2012/australian-gas-resource-assessment-2012.html page 1.

11 Ibid.


13 Ibid, page 2.

14 Ibid, page 13.

15 Ibid, page 2

16 Ibid, page 2.

17 Ibid, page 3.

18 Ibid, page 3.

19 Australian Government, Australian Energy Resource Assessment 2012, http://www.ga.gov.au/about-us/news-media/news-2012/australian-gas-resource-assessment-2012.html page 41.

20 US Energy Information Administration, Australia, http://www.eia.gov/countries/cab.cfm?fips=as (accessed 11 March 2014).

21 APPEA, Key Statistics 2013, http://www.appea.com.au/wp-content/uploads/2013/12/Key-Stats_2013.pdf page 3.

22 Ibid.

23 Geoscience Australia, Oil, http://www.ga.gov.au/energy/petroleum-resources/oil.html (accessed 11 March 2014).

24 US Energy Information Administration, Australia, http://www.eia.gov/countries/cab.cfm?fips=as (accessed 26 May 2014).

25 CSIRO, Petroleum and geothermal research, http://www.csiro.au/en/Outcomes/Energy/petroleum-and-geothermal/Research-programs.aspx#a2 (accessed 11 March 2014).

26 APPEA, Key Statistics 2014, http://www.appea.com.au/wp-content/uploads/2014/04/Key-Stats_2014_A4-print.pdf page 5.

27 Ibid, page 5.


29 US Energy Information Administration, Australia, http://www.eia.gov/countries/cab.cfm?fips=AS (accessed 11 March 2014).

30 BREE, Resources and Energy Quarterly – March Quarter 2014, http://www.bree.gov.au/sites/default/files/files//publications/req/REQ-2014-03.pdf pages 19 and 21.

31 Ibid; APPEA, Key Statistics 2013, http://www.appea.com.au/wp-content/uploads/2013/12/Key-Stats_2013.pdf page 2.

32 Australian Government, Australian Bulk Commodity Exports and Infrastructure – Outlook to 2025, http://www.appea.com.au/wp-content/uploads/2013/05/BREE-2012-Export-Infrastructure-Report.pdf page 6.

33 BREE, 2013 Australian Energy Update, http://bree.gov.au/sites/default/files/files//publications/aes/2013-australian-energy-statistics.pdf page 12.

34 Ibid.

35 Australian Government, Australian Bulk Commodity Exports and Infrastructure – Outlook to 2025, http://www.appea.com.au/wp-content/uploads/2013/05/BREE-2012-Export-Infrastructure-Report.pdf page 6.

36 BREE, Resources and Energy Statistics – Petroleum: Summary of Australian Statistics for Primary Petroleum, http://bree.gov.au/publications/resources-and-energy-statistics table 117.


38 US Energy Information Administration, Australia, http://www.eia.gov/countries/cab.cfm?fips=AS (accessed 11 March 2014).

39 Ibid.

40 Geoscience Australia, Oil, http://www.ga.gov.au/energy/petroleum-resources/oil.html (accessed 11 March 2014).

41 Australian Government, Australia 2013 – Offshore Petroleum Exploration Acreage Release, http://www.petroleum-acreage.gov.au/sites/default/files/files/2013/documents/exploring/Explore_Australia.pdf page 4.

42 Ibid.

43 APPEA, Key Statistics 2014, http://www.appea.com.au/wp-content/uploads/2014/04/Key-Stats_2014_A4-print.pdf page 6.

44 Australian Government, Offshore Petroleum Exploration Acreage Release, http://www.petroleum-acreage.gov.au/ (accessed 26 May 2014).

45 Ibid.

46 Australian Government, Australian Liquefied Natural Gas (LNG), http://www.innovation.gov.au/resource/UpstreamPetroleum/AustralianLiquefiedNaturalGas/Pages/default.aspx (accessed 26 May 2014).

47 Gas Processing News, Boxscore Construction Analysis http://www.gasprocessingnews.com/columns/201310/boxscore-construction-analysis.aspx (accessed 22 May 2014).

48 US Energy Information Administration, Australia, http://www.eia.gov/countries/cab.cfm?fips=as (accessed 27 May 2014). The information provided in Figure 3 reflects the information specified on the US Energy Information Administration website except where otherwise referenced.

49 North West Shelf Australia LNG, North West Shelf Venture, http://www.nwsalng.com.au/files/files/18_DRIMS-5645078-v1-NWSV_6_page_Brochure_June_2010_pdf.PDF (accessed 15 May 2014).

http://www.appea.com.au/oil-gas-explained/operation/australian-lng-projects/

http://www.ehp.qld.gov.au/management/non-mining/community-landholder.html

http://www3.weforum.org/docs/WEF_GlobalCompetitivenessReport_2013-14.pdf

http://www3.weforum.org/docs/WEF_GlobalCompetitivenessReport_2013-14.pdf

http://www.imf.org/external/Pubs/ft/weo/2014/01/pdf/text.pdf

http://www.dfat.gov.au/fta/

http://ceda.com.au/media/263565/cedaunconventionalenergyfinal.pdf

http://www.ga.gov.au/about-us/news-media/news-2012/australian-gas-resource-assessment-2012.html



http://www.eia.gov/countries/cab.cfm?fips=as

http://www.appea.com.au/wp-content/uploads/2013/12/Key-Stats_2013.pdf

http://www.ga.gov.au/energy/petroleum-resources/oil.html


http://www.csiro.au/en/Outcomes/Energy/petroleum-and-geothermal/Research-programs.aspx#a2

http://www.appea.com.au/wp-content/uploads/2014/04/Key-Stats_2014_A4-print.pdf


http://www.eia.gov/countries/cab.cfm?fips=AS

http://www.bree.gov.au/sites/default/files/files//publications/req/REQ-2014-03.pdf

http://www.appea.com.au/wp-content/uploads/2013/12/Key-Stats_2013.pdf

http://www.appea.com.au/wp-content/uploads/2013/05/BREE-2012-Export-Infrastructure-Report.pdf


http://bree.gov.au/sites/default/files/files//publications/aes/2013-australian-energy-statistics.pdf



http://bree.gov.au/publications/resources-and-energy-statistics



http://www.ga.gov.au/energy/petroleum-resources/oil.html

http://www.petroleum-acreage.gov.au/sites/default/files/files/2013/documents/exploring/Explore_Australia.pdf

http://www.petroleum-acreage.gov.au/sites/default/files/files/2013/documents/exploring/Explore_Australia.pdf


http://www.petroleum-acreage.gov.au/

http://www.innovation.gov.au/resource/UpstreamPetroleum/AustralianLiquefiedNaturalGas/Pages/default.aspx

http://www.gasprocessingnews.com/columns/201310/boxscore-construction-analysis.aspx


http://www.nwsalng.com.au/files/files/18_DRIMS-5645078-v1-NWSV_6_page_Brochure_June_2010_pdf.PDF


50 Woodside, Pluto LNG, http://www.woodside.com.au/our-business/pluto/pages/default.aspx (accessed 11 March 2014).

51 Chevron, Gorgon Project – Overview, http://www.chevronaustralia.com/docs/default-source/default-document-library/fact-sheet-gorgon-project-overview--jan-2014.pdf?sfvrsn=0 (accessed 11 March 2014).

52 Inpex has reached an agreement to transfer a 2.625% of the Ichthys LNG Project equity interest to CPC Corporation, Taiwan, subject to the satisfaction of certain conditions precedent including the approval by the Australian government (Inpex Corporation, Transfer of the Ichthys LNG Project equity interest to CPC Corporation, Taiwan, (27 June 2013), http://www.inpex.com.au/media/38866/%E3%80%90%E8%8B%B1%E6%96%87%E3%80%91130625_ichthysfo(cpc).pdf (accessed 27 May 2014)).

53 INPEX, The Ichthys Project, http://www.inpexcareers.com/content/ichthys-project (accessed 15 May 2014).

54 INPEX, Ichthys Project – Securing the Future, http://www.inpex.com.au/media/34891/ichthys%20project%20fact%20sheet%20-%20september%202012%20final.pdf (accessed 14 May 2014).

55 Chevron, Wheatstone Project Overview, https://www.chevronaustralia.com/docs/default-source/default-document-library/fact-sheet-wheatstone-project-overview.pdf?sfvrsn=2 (accessed 14 May 2014).

56 Shell, Prelude FLNG – an overview, http://www.shell.com/global/aboutshell/major-projects-2/prelude-flng/overview.html (accessed 27 May 2014).

57 PTTEP Australasia, Proposed Projects, http://www.au.pttep.com/projects/proposed (accessed 14 May 2014).

58 Ibid.

59 The Australian, Woodside has 50-year plan for Browse (20 March 2014) http://www.theaustralian.com.au/business/mining-energy/woodside-has-50year-plan-for-browse/story-e6frg9df-1226860341582 (accessed 19 May 2014).

60 GDF Suez, Bonaparte LNG Overview, http://www.gdfsuezbonaparte.com.au/ (accessed 14 May 2014).

61 GDF Suez, Bonaparte LNG – A floating liquefaction project in Australia, http://www.gdfsuez.com/wp-content/uploads/2013/11/BonaparteVA_V2_finale.pdf (accessed 14 May 2014).

62 ExxonMobil, Scarborough Project – Preliminary Environmental Documentation Report – September 2013, http://www.exxonmobil.com.au/Australia-English/PA/Files/scarborough_enviro_final.pdf (accessed 15 May 2014).

63 Australian Government, Onshore Petroleum Project, http://www.ga.gov.au/energy/projects/onshore-petroleum.html (accessed 15 May 2014).

64 Santos, Cooper Basin (overview), https://www.santos.com/our-activities/eastern-australia/cooper-basin-overview-.aspx (accessed 15 May 2014).

65 Ibid.

66 APPEA, Annual Production Statistics 2013, http://www.appea.com.au/?attachment_id=5192 (accessed 15 May 2014).

67 APPEA, Key Statistics 2014, http://www.appea.com.au/wp-content/uploads/2014/04/Key-Stats_2014_A4-print.pdf page 4 (accessed 15 May 2014).

68 Ibid.

69 APPEA, Annual Production Statistics 2013, http://www.appea.com.au/?attachment_id=5192 (accessed 15 May 2014).

70 Beach Energy, 2012 Annual Report, http://www.beachenergy.com.au/IRM/Company/ShowPage.aspx/PDFs/2624-53826559/2012AnnualReport page 18 (accessed 15 May 2014).

71 Beach Energy, Quarterly Report for the period ending 30 June 2013, http://www.beachenergy.com.au/IRM/Company/ShowPage.aspx/PDFs/3083-42257870/QuarterlyActivitiesReport%20page%202 page 2 (accessed 15 May 2014).

72 Beach Energy, 2012 Annual Report, http://www.beachenergy.com.au/IRM/Company/ShowPage.aspx/PDFs/2624-53826559/2012AnnualReport page 20 (accessed 15 May 2014).

73 Drillsearch, Cooper Basin Permits, http://www.drillsearch.com.au/page/cooper-basins-permit (accessed 27 May 2014).

74 Drillsearch, Quarterly Report June 2013, http://www.drillsearch.com.au/sites/default/files/document/2013_07_30-Drillsearch_June_2013_Quarterly_Report.pdf page 8.

75 Drillsearch, Drillsearch Annual Report 2013, http://www.drillsearch.com.au/sites/default/files/document/2013_10_18-2013_Drillsearch_Annual_Report.pdf page 16.

76 Santos, Second Quarter Activities Report for period ending 30 June 2013, http://www.santos.com/library/190713_Santos_Second_Quarter_Activities_Report.pdf page 3; Santos, Fourth Quarter Activities Report for period ending 31 December 2012, http://www.santos.com/library/170113_Santos_Fourth_Quarter_Activities_Report_0.pdf page 3.

77 Senex Energy, 2013 Annual Report, http://www.senexenergy.com.au/uploads/contentFiles/files/5467.SNX.Annual%20Report%202013%20FINAL%20EBOOK.pdf page 39.

78 Senex Energy, Quarterly Report – Period ending 30 June 2013, http://www.senexenergy.com.au/files/688/June-2013-Quarterly-Report.pdf page 1.

79 Ibid, page 3.

80 Santos, Moomba, http://www.santos.com/Content.aspx?p=225 (accessed 15 May 2014).

81 Stanos, Port Bonython, http://www.santos.com/our-activities/eastern-australia/port-bonython.aspx (accessed 15 May 2014).

82 Santos, Ballera, https://www.santos.com/Content.aspx?p=214 (accessed 15 May 2014).

83 DBP Transmission, Dampier to Bunbury Natural Gas Pipeline, http://www.dbp.net.au/ (accessed 15 May 2014).

84 Australian Energy Regulator, State of the energy market 2013, http://www.aer.gov.au/sites/default/files/Chapter%203%20-%20Upstream%20gas%20markets%20A4.pdf page 89 (accessed 27 May 2014).

85 CSIRO, Unconventional gas capabilities, http://www.csiro.au/Outcomes/Energy/Energy-from-oil-and-gas/unconventional-gas.aspx (accessed 15 May 2014).


87 GeoScience Australia – Australian Atlas of Mineral Resources, Mines and Processing Centres, Coal Seam Gas Fact Sheet, http://www.australianminesatlas.gov.au/education/fact_sheets/coal_seam_gas.html (accessed 15 May 2014).

88 Ibid.

89 Ibid.

90 Ibid.

91 Australian Government, Australian Gas Resource Assessment 2012, http://www.ga.gov.au/webtemp/image_cache/GA21116.pdf page 37.

92 Ibid, page 16.

93 Queensland Government, About coal seam gas (CSG) and liquefied natural gas (LNG), http://www.dnrm.qld.gov.au/mining/coal-seam-gas/about (accessed 15 May 2014).

94 Australian Government, Gas Market Report July 2012, http://www.bree.gov.au/documents/publications/gas-market/gas-market-report.pdf page 24.

95 Queensland Government, Queensland’s gas reserves, http://www.business.qld.gov.au/industry/energy/gas/gas-queensland/queenslands-gas-reserves (accessed 27 May 2014).

http://www.woodside.com.au/our-business/pluto/pages/default.aspx

http://www.chevronaustralia.com/docs/default-source/default-document-library/fact-sheet-gorgon-project-overview--jan-2014.pdf?sfvrsn=0

http://www.inpex.com.au/media/38866/%E3%80%90%E8%8B%B1%E6%96%87%E3%80%91130625_ichthysfo(cpc).pdf

http://www.inpex.com.au/media/38866/%E3%80%90%E8%8B%B1%E6%96%87%E3%80%91130625_ichthysfo(cpc).pdf

http://www.inpexcareers.com/content/ichthys-project

http://www.inpex.com.au/media/34891/ichthys%20project%20fact%20sheet%20-%20september%202012%20final.pdf

https://www.chevronaustralia.com/docs/default-source/default-document-library/fact-sheet-wheatstone-project-overview.pdf?sfvrsn=2

http://www.shell.com/global/aboutshell/major-projects-2/prelude-flng/overview.html

http://www.au.pttep.com/projects/proposed

http://www.theaustralian.com.au/business/mining-energy/woodside-has-50year-plan-for-browse/story-e6frg9df-1226860341582


http://www.gdfsuezbonaparte.com.au/

http://www.gdfsuez.com/wp-content/uploads/2013/11/BonaparteVA_V2_finale.pdf

http://www.exxonmobil.com.au/Australia-English/PA/Files/scarborough_enviro_final.pdf

http://www.ga.gov.au/energy/projects/onshore-petroleum.html

https://www.santos.com/our-activities/eastern-australia/cooper-basin-overview-.aspx

http://www.appea.com.au/?attachment_id=5192


http://www.appea.com.au/?attachment_id=5192

http://www.beachenergy.com.au/IRM/Company/ShowPage.aspx/PDFs/2624-53826559/2012AnnualReport

http://www.beachenergy.com.au/IRM/Company/ShowPage.aspx/PDFs/3083-42257870/QuarterlyActivitiesReport%20page%202

http://www.beachenergy.com.au/IRM/Company/ShowPage.aspx/PDFs/3083-42257870/QuarterlyActivitiesReport%20page%202

http://www.beachenergy.com.au/IRM/Company/ShowPage.aspx/PDFs/2624-53826559/2012AnnualReport

http://www.drillsearch.com.au/page/cooper-basins-permit

http://www.drillsearch.com.au/sites/default/files/document/2013_07_30-Drillsearch_June_2013_Quarterly_Report.pdf

http://www.drillsearch.com.au/sites/default/files/document/2013_10_18-2013_Drillsearch_Annual_Report.pdf

http://www.santos.com/library/190713_Santos_Second_Quarter_Activities_Report.pdf

http://www.santos.com/library/170113_Santos_Fourth_Quarter_Activities_Report_0.pdf

http://www.senexenergy.com.au/uploads/contentFiles/files/5467.SNX.Annual%20Report%202013%20FINAL%20EBOOK.pdf

http://www.senexenergy.com.au/files/688/June-2013-Quarterly-Report.pdf

http://www.santos.com/Content.aspx?p=225

http://www.santos.com/our-activities/eastern-australia/port-bonython.aspx

https://www.santos.com/Content.aspx?p=214

http://www.dbp.net.au/

http://www.aer.gov.au/sites/default/files/Chapter%203%20-%20Upstream%20gas%20markets%20A4.pdf

http://www.csiro.au/Outcomes/Energy/Energy-from-oil-and-gas/unconventional-gas.aspx


http://www.australianminesatlas.gov.au/education/fact_sheets/coal_seam_gas.html


http://www.ga.gov.au/webtemp/image_cache/GA21116.pdf

http://www.dnrm.qld.gov.au/mining/coal-seam-gas/about

http://www.bree.gov.au/documents/publications/gas-market/gas-market-report.pdf

http://www.business.qld.gov.au/industry/energy/gas/gas-queensland/queenslands-gas-reserves

96 GeoScience Australia – Australian Atlas of Mineral Resources, Mines and Processing Centres, Coal Seam Gas Fact Sheet, http://www.australianminesatlas.gov.au/education/fact_sheets/coal_seam_gas.html (accessed 27 May 2014).

97 Australian Government, Gas Market Report October 2013, http://bree.slicedlabs.com.au/sites/default/files/files/publications/gas-market/gasmarketreport-201310.pdf page 28.

98 Department of Natural Resources and Mines (Queensland), Coal seam gas production, http://mines.industry.qld.gov.au/mining/production-reserves-statistics.htm (accessed 26 August 2013).

99 Australian Government, Gas Market Report October 2013, http://bree.slicedlabs.com.au/sites/default/files/files/publications/gas-market/gasmarketreport-201310.pdf page 38.

100 Committee for Economic Development of Australia, Australia’s Unconventional Energy Options September 2012, http://ceda.com.au/media/263565/cedaunconventionalenergyfinal.pdf page 18.

101 US Energy Information Administration, Australia – Analysis, http://www.eia.gov/countries/cab.cfm?fips=AS (accessed 15 May 2014).

102 Ibid.

103 US Energy Information Administration, Analysis & Projection of Technically Recoverable Shale Oil and Shale Gas Resources – 13 June 2013, http://www.eia.gov/analysis/studies/worldshalegas/ (accessed 27 May 2014).

104 Ibid.

105 Ibid.

106 Australian Council of Learned Academies, Engineering Energy: Unconventional Gas Production, A study of shale gas in Australia, http://www.appea.com.au/wp-content/uploads/2013/07/ACOLA-Final-Report-Engineering-Energy-June-2013.pdf page 22.

107 CSIRO, Australia’s shale gas resources, http://www.csiro.au/Outcomes/Energy/Energy-from-oil-and-gas/Shale-gas-potential.aspx (accessed 15 May 2014).

108 US Energy Information Administration, Australia – Analysis, http://www.eia.gov/countries/cab.cfm?fips=AS (accessed 24 July 2013).

109 Australian Council of Learned Academies, Engineering Energy: Unconventional Gas Production, A study of shale gas in Australia, http://www.appea.com.au/wp-content/uploads/2013/07/ACOLA-Final-Report-Engineering-Energy-June-2013.pdf page 49.

110 CSIRO, Australia’s shale gas resources, http://www.csiro.au/Outcomes/Energy/Energy-from-oil-and-gas/Shale-gas-potential.aspx (accessed 15 May 2014).

111 Ibid.

112 US Energy Information Administration, Australia – Analysis, http://www.eia.gov/countries/cab.cfm?fips=AS (accessed 15 May 2014).


114 Ibid, page 18.

115 Ibid, page 3.

116 Ibid, page 18.

117 Ibid, page 21.

118 Ibid, page 18.

119 Department for Manufacturing, Innovation, Trade, Resources and Energy, Tight Gas, http://www.petroleum.pir.sa.gov.au/prospectivity/basin_and_province_information/unconventional_gas/tight_gas (accessed 15 May 2014).

120 Ibid.

121 Senex Energy Limited, Kingston Rule-1 flows at 1.2 million cubic feet per day, http://www.asx.com.au/asxpdf/20130311/pdf/42dksy7kxzflpn.pdf (accessed 15 May 2014); E&P, Australian unconventional plays remain in proof-of-concept stage, http://www.epmag.com/item/Australian-unconventional-plays-remain-proof-of-concept-stage_114356 (accessed 27 May 2014).

122 Committee for Economic Development of Australia, Australia’s Unconventional Energy Options September 2012, http://ceda.com.au/media/263565/cedaunconventionalenergyfinal.pdf page 18.

123 QGC, Export & Domestic Markets, http://www.qgc.com.au/qclng-project/export-domestic-markets.aspx (accessed 27 May 2014).

124 APLNG, Project partners, http://www.aplng.com.au/about-project/project-partners (accessed 27 May 2014).

125 GLNG, Partners, http://www.santosglng.com/the-project/partners.aspx (accessed 27 May 2014).

126 LNG Limited, Australia, http://www.lnglimited.com.au/irm/content/australia1.aspx?RID=262&RedirectCount=1 (accessed 15 May 2014).

127 Arrow Energy, Arrow LNG Plant, http://www.arrowenergy.com.au/projects/arrow-lng-plant (accessed 15 May 2014).

128 QGC, the energy, February 2014, Issue 33, http://www.qgc.com.au/ebooks/20140206_TheEnergy_Issue33/pubData/source/20140206_TheEnergy_Issue33.pdf page 11.

129 US Energy Information Administration, Australia – Analysis, http://www.eia.gov/countries/cab.cfm?fips=AS (accessed 15 May 2014). The information provided in the table below reflects the information specified on the US Energy Information Administration website except where otherwise referenced.

130 QGC, Fact Sheet – The Queensland Curtis LNG Project, http://www.qgc.com.au/media/100578/20140407_qclng_project_fact_sheet.pdf (accessed 15 May 2014).

131 BG Group, Binding agreements signed for QCLNG stake sale and LNG supply, 6 May 2014, http://www.bg-group.com/~/tiles/?tiletype=pressrelease&id=491 (accessed 27 May 2014); BG Group, BG Group’s LNG business, http://www.qgc.com.au/media/239458/bg_fsheet_2013_lng_v2.pdf page 1.

132 APLNG, The Australia Pacific LNG Project, http://www.aplng.com.au/pdf/factsheets/_APLNG012__Fact_Sheet_The_APL_Project_FINAL.PDF (accessed 15 May 2014).

133 Santos, GLNG project sanctioned, 13 January 2011, http://www.santos.com/Archive/NewsDetail.aspx?id=1244 (accessed 15 May 2014).

134 Santos GLNG Project, The Project, http://www.santosglng.com/the-project.aspx (accessed 16 May 2014).

135 LNG Limited, Liquefied Natural Gas Limited, March 2014 Quarterly Report, http://lnglimited.com.au/IRM/Company/ShowPage.aspx/PDFs/2019-68129572/QuarterlyReportMarch2014 page 2 (accessed 16 May 2014).

136 LNG Limited, Australia, http://www.lnglimited.com.au/irm/content/australia1.aspx?RID=262&RedirectCount=1 (accessed 15 May 2014).

137 The Australian Pipeline, Arrow postponement confirmed, http://pipeliner.com.au/news/arrow_postponement_confirmed/085738/ (accessed 27 May 2014).

138 Ibid.

139 Ibid, page 1-4.

140 Shell, Prelude – Australia, http://www.shell.com.au/aboutshell/who-we-are/shell-au/operations/upstream/prelude.html (accessed 19 May 2014).

141 Ibid.

FOOTNOTES



http://bree.slicedlabs.com.au/sites/default/files/files/publications/gas-market/gasmarketreport-201310.pdf

http://mines.industry.qld.gov.au/mining/production-reserves-statistics.htm

http://bree.slicedlabs.com.au/sites/default/files/files/publications/gas-market/gasmarketreport-201310.pdf



http://www.eia.gov/analysis/studies/worldshalegas/

http://www.appea.com.au/wp-content/uploads/2013/07/ACOLA-Final-Report-Engineering-Energy-June-2013.pdf


http://www.csiro.au/Outcomes/Energy/Energy-from-oil-and-gas/Shale-gas-potential.aspx




http://www.csiro.au/Outcomes/Energy/Energy-from-oil-and-gas/Shale-gas-potential.aspx



http://www.petroleum.pir.sa.gov.au/prospectivity/basin_and_province_information/unconventional_gas/tight_gas

http://www.petroleum.pir.sa.gov.au/prospectivity/basin_and_province_information/unconventional_gas/tight_gas

http://www.asx.com.au/asxpdf/20130311/pdf/42dksy7kxzflpn.pdf

http://www.epmag.com/item/Australian-unconventional-plays-remain-proof-of-concept-stage_114356


http://www.qgc.com.au/qclng-project/export-domestic-markets.aspx

http://www.aplng.com.au/about-project/project-partners

http://www.santosglng.com/the-project/partners.aspx

http://www.lnglimited.com.au/irm/content/australia1.aspx?RID=262&RedirectCount=1

http://www.arrowenergy.com.au/projects/arrow-lng-plant

http://www.qgc.com.au/ebooks/20140206_TheEnergy_Issue33/pubData/source/20140206_TheEnergy_Issue33.pdf


http://www.qgc.com.au/media/100578/20140407_qclng_project_fact_sheet.pdf

http://www.bg-group.com/~/tiles/?tiletype=pressrelease&id=491

http://www.qgc.com.au/media/239458/bg_fsheet_2013_lng_v2.pdf

http://www.aplng.com.au/pdf/factsheets/_APLNG012__Fact_Sheet_The_APL_Project_FINAL.PDF

http://www.santos.com/Archive/NewsDetail.aspx?id=1244

http://www.santosglng.com/the-project.aspx

http://lnglimited.com.au/IRM/Company/ShowPage.aspx/PDFs/2019-68129572/QuarterlyReportMarch2014

http://www.lnglimited.com.au/irm/content/australia1.aspx?RID=262&RedirectCount=1

http://pipeliner.com.au/news/arrow_postponement_confirmed/085738/

http://www.shell.com.au/aboutshell/who-we-are/shell-au/operations/upstream/prelude.html


142 Ibid.

143 Offshore Technology, Shell’s Prelude FLNG Project, Browse Basin, Australia, http://www.offshore-technology.com/projects/shell-project/shell-project2.html (accessed 19 May 2014).

144 Shell, Prelude – Australia, http://www.shell.com.au/aboutshell/who-we-are/shell-au/operations/upstream/prelude.html (accessed 27 May 2014).

145 Ibid.

146 Ibid.

147 ICN Gateway, Bonaparte LNG, http://gateway.icn.org.au/project/2853/bonaparte-lng (accessed 19 May 2014); Santos, Bonaparte basin, http://www.santos.com/our-activities/western-australia-northern-territory/bonaparte-basin.aspx (accessed 27 May 2014).

148 GDF Suez, Bonaparte LNG – A floating liquefaction project in Australia, http://www.gdfsuez.com/wp-content/uploads/2013/11/BonaparteVA_V2_finale.pdf.pdf (accessed 19 May 2014); Santos, Santos and GDF Suez announce strategic partnership, http://www.asx.com.au/asxpdf/20090818/pdf/31k4lxcmtk162p.pdf (accessed 27 May 2014).

149 GDF Suez, Bonaparte LNG – A floating liquefaction project in Australia, http://www.gdfsuez.com/wp-content/uploads/2013/11/BonaparteVA_V2_finale.pdf.pdf (accessed 19 May 2014).

150 Platts McGraw Hill Financial, Australia’s Bonaparte floating LNG project to start up in 2019, http://www.platts.com/latest-news/natural-gas/darwin-australia/australias-bonaparte-floating-lng-project-to-27399343 (accessed 19 May 2014).

151 Financial Review, Woodside eyes mid-2015 for Browse FLNG, http://www.afr.com/p/markets/market_wrap/woodside_eyes_mid_for_browse_flng_h591VRKR0fkVs0tnshdgbP (accessed 19 May 2014).

152 Woodside, Browse Joint Venture selects floating LNG as basis of design, http://www.woodside.com.au/our-business/browse/Pages/default.aspx (accessed 27 May 2014).

153 The Australian, Woodside has 50-year plan for Browse (20 March 2014) http://www.theaustralian.com.au/business/mining-energy/woodside-has-50year-plan-for-browse/story-e6frg9df-1226860341582 (accessed 19 May 2014).

154 Corrs Chambers Westgarth, FLNG in the Greater Sunrise basin – Can Gary Gray Make a Difference? (17 April 2013), http://www.corrs.com.au/thinking/insights/flng-in-the-greater-sunrise-basin-can-gary-gray-make-a-difference/ (accessed 19 May 2014); Shell, Prelude – Australia, http://www.shell.com.au/aboutshell/who-we-are/shell-au/operations/upstream/prelude.html (accessed 19 May 2014).

155 Offshore Engineer, Paul Jukes and Bryan Trocquet, FLNG: an industry game changer? http://www.mustangeng.com/AboutMustang/Publications/Publications/OE_FLNG_AnIndustryGameChanger.pdf page 44 (accessed 19 May 2014).

156 Corrs Chambers Westgarth, FLNG in the Greater Sunrise basin – Can Gary Gray Make a Difference? http://www.corrs.com.au/thinking/insights/flng-in-the-greater-sunrise-basin-can-gary-gray-make-a-difference/ (accessed 29 July 2013).

157 Ibid; Offshore Engineer, Paul Jukes and Bryan Trocquet, FLNG: an industry game changer? http://www.mustangeng.com/AboutMustang/Publications/Publications/OE_FLNG_AnIndustryGameChanger.pdf page 44 (accessed 19 May 2014).

158 ABC News Online, Kathryn Diss, Shell says floating LNG technology up to 50 per cent cheaper than onshore development (23 October 2013) http://www.abc.net.au/news/2013-10-23/shell-planning-to-source-browse-staff-locally/5041286 (accessed 19 May 2014).

159 Offshore Engineer, Paul Jukes and Bryan Trocquet, FLNG: an industry game changer? http://www.mustangeng.com/AboutMustang/Publications/Publications/OE_FLNG_AnIndustryGameChanger.pdf page 44 (accessed 19 May 2014).

160 Queensland Government Department of Natural Resources and Mines, Underground Coal Gasification, http://mines.industry.qld.gov.au/mining/underground-coal-gasification.htm (accessed 19 May 2014).

161 Ibid.

162 Carbon Energy, Projects – Bloodwood Creek, Australia, http://www.carbonenergy.com.au/irm/content/bloodwood-creek-australia.aspx?RID=221 (accessed 19 May 2014).

163 Carbon Energy, Projects – Bloodwood Creek, Australia, http://www.carbonenergy.com.au/irm/content/bloodwood-creek-australia.aspx?RID=221 (accessed 20 June 2014).

164 The Mining Advocate, State of uncertainty for UCG, http://www.miningadvocate.com.au/24/jan-2014/state-of-uncertainty-for-ucg (accessed 22 May 2014).

165 Queensland Government Department of Natural Resources and Mines, Underground Coal Gasification, http://mines.industry.qld.gov.au/mining/underground-coal-gasification.htm (accessed 25 July 2013).

166 Ibid.

167 Linc Energy, UCG at Chinchilla to decommission after 14 successful years of operations and move offshore (5 November 2013), http://www.lincenergy.com/data/asxpdf/ASX-LNC-518.pdf (accessed 19 May 2014).

168 Queensland Government Department of Natural Resources and Mines, Underground Coal Gasification, http://mines.industry.qld.gov.au/mining/underground-coal-gasification.htm (accessed 25 July 2013).

169 Queensland Government, Media Release Report recommends way ahead for UCG industry – 8 July 2013, http://statements.qld.gov.au/Statement/2013/7/8/report-recommends-way-ahead-for-ucg-industry (accessed 19 May 2014).

170 Ibid.

171 Australian Government, Energy in Australia May 2013, http://bree.slicedlabs.com.au/sites/default/files/files/publications/energy-in-aust/bree-energyinaustralia-2013.pdf page 71 (accessed 19 May 2014).

172 Economic Regulation Authority Western Australia, Inquiry into Microeconomic Reform in Western Australia – Draft Report – 11 April 2014, http://www.erawa.com.au/cproot/12216/2/Draft%20Report.pdf page 292 (accessed 19 May 2014).

173 DomGas Alliance, Australia’s Domestic Gas Security Report 2012, http://www.domgas.com.au/pdf/Alliance_reports/DomGas%20Report%202012.pdf pages 18 and 22-24, (accessed 19 May 2014).

174 Ibid, page 18.

175 Economic Regulation Authority Western Australia, Inquiry into Microeconomic Reform in Western Australia – Draft Report – 11 April 2014, http://www.erawa.com.au/cproot/12216/2/Draft%20Report.pdf page 292 (accessed 19 May 2014).

176 Ibid, page 292.

177 Ibid, page 292-293.

178 APPEA, The domestic gas debate, http://www.appea.com.au/industry-in-depth/policy/energy-policy/the-domestic-gas-debate/ (accessed 19 May 2014).

179 Ibid.

http://www.offshore-technology.com/projects/shell-project/shell-project2.html


http://gateway.icn.org.au/project/2853/bonaparte-lng

http://www.santos.com/our-activities/western-australia-northern-territory/bonaparte-basin.aspx

http://www.santos.com/our-activities/western-australia-northern-territory/bonaparte-basin.aspx

http://www.gdfsuez.com/wp-content/uploads/2013/11/BonaparteVA_V2_finale.pdf.pdf

http://www.asx.com.au/asxpdf/20090818/pdf/31k4lxcmtk162p.pdf

http://www.gdfsuez.com/wp-content/uploads/2013/11/BonaparteVA_V2_finale.pdf.pdf

http://www.platts.com/latest-news/natural-gas/darwin-australia/australias-bonaparte-floating-lng-project-to-27399343

http://www.platts.com/latest-news/natural-gas/darwin-australia/australias-bonaparte-floating-lng-project-to-27399343

http://www.afr.com/p/markets/market_wrap/woodside_eyes_mid_for_browse_flng_h591VRKR0fkVs0tnshdgbP

http://www.woodside.com.au/our-business/browse/Pages/default.aspx



http://www.corrs.com.au/thinking/insights/flng-in-the-greater-sunrise-basin-can-gary-gray-make-a-difference/



http://www.mustangeng.com/AboutMustang/Publications/Publications/OE_FLNG_AnIndustryGameChanger.pdf






http://www.abc.net.au/news/2013-10-23/shell-planning-to-source-browse-staff-locally/5041286

http://www.abc.net.au/news/2013-10-23/shell-planning-to-source-browse-staff-locally/5041286



http://mines.industry.qld.gov.au/mining/underground-coal-gasification.htm

http://www.carbonenergy.com.au/irm/content/bloodwood-creek-australia.aspx?RID=221

http://www.carbonenergy.com.au/irm/content/bloodwood-creek-australia.aspx?RID=221

http://www.miningadvocate.com.au/24/jan-2014/state-of-uncertainty-for-ucg


http://www.lincenergy.com/data/asxpdf/ASX-LNC-518.pdf


http://statements.qld.gov.au/Statement/2013/7/8/report-recommends-way-ahead-for-ucg-industry

http://statements.qld.gov.au/Statement/2013/7/8/report-recommends-way-ahead-for-ucg-industry

http://bree.slicedlabs.com.au/sites/default/files/files/publications/energy-in-aust/bree-energyinaustralia-2013.pdf

http://www.erawa.com.au/cproot/12216/2/Draft%20Report.pdf


http://www.domgas.com.au/pdf/Alliance_reports/DomGas%20Report%202012.pdf



http://www.appea.com.au/industry-in-depth/policy/energy-policy/the-domestic-gas-debate/

180 Australia Government, Productivity Commission, Mineral and Energy Resource Exploration, http://www.pc.gov.au/projects/inquiry/resource-exploration (accessed 22 May 2014).

181 Ibid, page 71.

182 Ibid, pages 108 and 112.

183 Ibid, page 32.

184 Ibid, page 141.

185 Ibid, page 113.

186 Ibid, page 170.

187 Ibid, page 3.

188 McKinsey&Company, Extending the LNG Boom: Improving Australian LNG productivity and competitiveness, http://www.mckinsey.com/global_locations/pacific/australia/en/latest_thinking/extending_the_lng_boom (accessed 4 June 2014).

189 This is in addition to any ACCC review required in relation to a transaction.

190 Also referred to as an “authority to prospect” for onshore petroleum exploration in Queensland.

191 Petroleum and Gas (Production and Safety Act) 2004 (Qld), section 42(2)(b).

192 Also referred to as a “petroleum assessment lease” for onshore exploration in New South Wales, or a “potential commercial area” for onshore exploration in Queensland.

193 Petroleum Act 1988 (Vic), section 42.

194 Also referred to as a “petroleum lease” for onshore petroleum production in Queensland.

195 Petroleum Act 1988 (Vic), section 59.

196 Offshore Petroleum and Greenhouse Gas Storage Act 2004 (Cth), section 165(1).

197 For both onshore (Petroleum and Geothermal Energy Resources Act 1967 (WA), section 63) and offshore coastal waters (Petroleum (Submerged Lands) Act 1982 (WA), section 53) petroleum production.

198 Petroleum and Gas (Production and Safety) Act 2004 (Qld), section 305.

199 Petroleum and Gas (Production and Safety) Act 2004 (Qld), section 306.

200 Standing Council on Energy and Resources, Natural Gas from Coal Seams, http://www.scer.gov.au/workstreams/land-access/coal-seam-gas/ (accessed 15 August 2013).

201 Queensland Government, Factsheet: Hydraulic fracturing (fraccing) in CSG wells, http://203.210.126.185/dsdweb/v4/apps/web/secure/docs/4377.pdf page 2.

202 Queensland Department of Employment, Economic Development and Innovation, Intended Hydraulic Fracture Activities, Information for Landowners and Occupiers, http://mines.industry.qld.gov.au/assets/land-tenure-pdf/PGGD04-completion-fraccing-info-sheet.pdf page 1.

203 NSW Government, Code of Practice for Coal Seam Gas Fracture Stimulation, https://www.csg.nsw.gov.au/protections/codes-of-practice-hydraulic-fracturing (accessed 17 March 2014).

204 Ibid.

205 Ibid.

206 Victorian Government – Latest News, Gas Market Taskforce, http://www.vic.gov.au/news/gas-market-taskforce-report.html (accessed 12 June 2014).

207 Ibid.

208 Corrs Chambers Westgarth, The Regulation of Unconventional Petroleum Exploration and Production in Western Australia, http://www.corrs.com.au/publications/corrs-in-brief/the-regulation-of-unconventional-petroleum-exploration-and-production-in-western-australia/ (accessed 19 August 2013).

209 Environmental Protection Authority Western Australia, Environmental Bulletin: Hydraulic fracturing of gas reserves, http://www.epa.wa.gov.au/EPADocLib/EPB%2015%20Fracking%20050911.pdf page 3.

210 South Australian Government, Roadmap for Unconventional Gas Projects in South Australia, http://www.pir.sa.gov.au/petroleum/prospectivity/basin_and_province_information/unconventional_gas/unconventional_gas_interest_group/roadmap_for_unconventional_gas_projects_in_sa page 239.

211 Australian Competition & Consumer Commission, The North West Shelf Project – Authorisations – A91220 – A9122, http://transition.accc.gov.au/content/index.phtml/itemId/922104/fromItemId/401858 (accessed 27 August 2013).

212 Offshore Petroleum (Royalty) Act 2006 (Cth).

FOOTNOTES

http://www.pc.gov.au/projects/inquiry/resource-exploration

http://www.mckinsey.com/global_locations/pacific/australia/en/latest_thinking/extending_the_lng_boom

http://www.mckinsey.com/global_locations/pacific/australia/en/latest_thinking/extending_the_lng_boom

http://www.scer.gov.au/workstreams/land-access/coal-seam-gas/

http://203.210.126.185/dsdweb/v4/apps/web/secure/docs/4377.pdf

http://mines.industry.qld.gov.au/assets/land-tenure-pdf/PGGD04-completion-fraccing-info-sheet.pdf

http://mines.industry.qld.gov.au/assets/land-tenure-pdf/PGGD04-completion-fraccing-info-sheet.pdf

https://www.csg.nsw.gov.au/protections/codes-of-practice-hydraulic-fracturing

http://www.vic.gov.au/news/gas-market-taskforce-report.html

http://www.corrs.com.au/publications/corrs-in-brief/the-regulation-of-unconventional-petroleum-exploration-and-production-in-western-australia/

http://www.corrs.com.au/publications/corrs-in-brief/the-regulation-of-unconventional-petroleum-exploration-and-production-in-western-australia/

http://www.epa.wa.gov.au/EPADocLib/EPB%2015%20Fracking%20050911.pdf

http://www.pir.sa.gov.au/petroleum/prospectivity/basin_and_province_information/unconventional_gas/unconventional_gas_interest_group/roadmap_for_unconventional_gas_projects_in_sa

http://www.pir.sa.gov.au/petroleum/prospectivity/basin_and_province_information/unconventional_gas/unconventional_gas_interest_group/roadmap_for_unconventional_gas_projects_in_sa

http://transition.accc.gov.au/content/index.phtml/itemId/922104/fromItemId/401858

http://transition.accc.gov.au/content/index.phtml/itemId/922104/fromItemId/401858

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