The Northern Territory (NT) Government has passed the Petroleum Royalty Act 2023, which benefits the entire State and gives uniformity to industry.
The act establishes a framework for calculating, paying, and administering petroleum royalties, repealing and replacing the existing systems.
“The Petroleum Royalty Bill streamlines the regulatory framework for the industry and provides a robust investment environment to grow the Northern Territory’s economy,” Treasurer Eva Lawler said.
Treasurer Lawler stated that a modern and contemporary royalty statute guarantees that Territorians reap the greatest benefit from the petroleum business, with the proceeds remaining in the Territory.
“It will provide ongoing jobs for Territorians, opportunities for regional and remote areas and an increase in infrastructure right across the Territory,” Treasurer Lawler added.
It levies a 10% royalty on the gross value of petroleum at the wellhead, including sales made under an exploration permit. The royalty rate remains the same as under the current petroleum royalty arrangements.
The royalty calculation is laid out in statute, replacing the current approach, which requires producers and the Minister to negotiate individual agreements for each petroleum field.
According to the State Government, as petroleum is rarely sold at the wellhead, a netback methodology is utilised to account for the expenditures incurred after the wellhead to the point of sale.
To guarantee that the State always receives a return for the disposal of its resources, the State Government said a deduction cap restricts the recognition of post-wellhead costs to 75% of the sales value.
From the start, every petroleum produced will be subject to the new legislation. Current producers will be moved into the new scheme through a process that provides enough notice and adheres to natural justice and procedural fairness criteria.
The new legislation also implements the administrative elements of the Taxation Administration Act 2007, bringing the petroleum royalties administration in line with other revenue lines in the Territory.
The Bill modernises the Territory’s petroleum royalty statute and is consistent with the final findings of the Territory Economic Reconstruction Commission.
