The Territory Labor Government has successfully delivered the Petroleum Royalty Act 2023, which benefits the entire Northern Territory and provides industry with consistency.
The new legislation provides the framework for the calculation, payment and administration of petroleum royalties, repealing and replacing the current arrangements.
It imposes royalty at a rate of 10% on the gross value of petroleum at the wellhead, including sales made on an exploration permit. The royalty rate is unchanged from the current petroleum royalty arrangements.
The royalty calculation is set out clearly in legislation, replacing the current regime that requires individual agreements for each petroleum field, to be negotiated between producers and the Minister.
As petroleum is not usually sold at the wellhead, a netback methodology is used to recognise the costs incurred after the wellhead to the point of sale.
A deduction cap limits the recognition of post well-head costs to 75% of the sales value to ensure that the Territory always receives a return for removal of its resources.
All petroleum produced will be subject to the new legislation from its commencement. Existing producers will be transitioned into the new scheme under a process that provides appropriate notice and complies with the principles of natural justice and procedural fairness.
The new legislation also applies the administrative provisions of the Taxation Administration Act 2007 bringing the administration of petroleum royalties in line with other revenue lines in the Territory.
The Bill modernises the Territory's petroleum royalty legislation and aligns with the recommendations of the Territory Economic Reconstruction Commission final report.
Quotes from Treasurer, Eva Lawler:
"The Petroleum Royalty Bill streamlines the regulatory framework for the industry and provides a robust investment environment to grow the Northern Territory's economy.
A modern and contemporary royalty act ensures Territorians get the maximum benefit from the petroleum industry, which sees the returns stay 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."
Northern Territory Government
