The Federal Government wants to ignite a new resources boom by forcing rich multinational companies to develop their claims over vast reserves of potentially lucrative WA gas and oil fields.
Confirming that the Government sees WA LNG as central to restoring the Federal Budget to surplus, Resources Minister Martin Ferguson said yesterday he would no longer let companies use Australia as a “safe haven” by sitting on undeveloped fields while investing overseas.
Releasing a discussion paper on retention leases, Mr Ferguson foreshadowed significant tightening of the so-called “use it or lose it” provisions and a slashing of the 15-year period allowed from resource discovery to extraction.
“We will no longer tolerate oil companies sitting on assets that are commercially capable of being developed here and now,” he said. “We will not accept that our natural assets are stranded whilst oil and gas is developed elsewhere in the world.”
Under options before the Government, explorers with claims on gas fields would have to prove they had made every effort to commercialise them and had considered all possible markets.
Retention lease holders would have to prove they were chasing marketing opportunities, negotiating on-shore project sites and engaging natural gas suppliers.
And to end an established blocking tactic to development and maximise competitive tension, joint-venture partners would be able to commercialise a lease individually irrespective of joint venture arrangements.
Of the 46 five-year retention leases, 31 are up for renewal.
There are 32 retention leases off the coast of WA alone.
Citing Woodside Petroleum’s $12 billion Pluto project, which will produce LNG by the end of next year — just 5 1 /2 years after the gas reserves were found — the paper says the 15 years allowed to commercialise fields did not create enough pressure for development.
Mr Ferguson said LNG development, especially in the Pilbara and the Kimberley, was a vital economic stimulus, far bigger than the $42 billion cash and infrastructure spend this year.
The Australian Petroleum Production and Exploration Association said any changes must recognise big investments made by its members.
Woodside and Chevron both declined to comment.
So ready for some action
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