Woodside in trouble... Not gonna go well with Senegal govt.....

Woodside in trouble...
Not gonna go well with Senegal govt..

Auditor finds 'considerable errors' in North West Shelf royalties

• Share via Email
• Share on Google Plus
• Post on facebook wall
• Share on twitter
• Post to Linkedin
• Share on Reddit

http://www.copyright link/content/dam/images/g/g/z/n/5/3/image.related.afrArticleLead.620x350.gsz27q.png/1480311925124.jpg
An LNG tanker loading at North West Shelf venture's Karratha plant. Supplied
by Joanna Mather
Oil and gas companies may have incorrectly claimed billions in deductions for their operations on the North West Shelf, according to an audit office report.

The report identifies $19.6 million in underpaid royalties - and possibly much more - over an 18-month period.

"The findings of the report indicate a risk of considerable errors in the claiming of deductions that warrants further, more forensic investigation," the Australian National Audit office said in a report on Monday.

But the federal department responsible for royalty collection has distanced itself from such an investigation, arguing it does not have the resources.


The Woodside-operated North West Shelf Project is Australia's largest oil and gas development.


Producers reported $19.7 billion in revenue from petroleum sales between July 2014 and December 2015.

They claimed $5 billion in deductions for expenses such as operating costs and the depreciation of capital assets over that 18-month period.

As a result, $1.9 billion in royalties was collected.

The federal government kept a third; Western Australia retained two-thirds.


The Department of Industry, Innovation and Science is responsible for the collection of royalties at the federal level and the WA Department of Mines and Petroleum controls the calculation and collection of those royalties.

In comments seized upon by the Greens, the audit office said it was concerned about the eligibility of deductions claimed for the cost of debt and equity funded capital, as well as excise paid on crude oil and condensate (what remains when a gaseous substance into a liquid).

"There has been limited scrutiny of the claimed deductions," the report said.

"Some errors in the claiming of deductions have been identified, but the available evidence indicates that the problems are much greater than has yet been quantified."


The project's operator has agreed to pay an outstanding amount of $8.6 million, but the audit office said at least another $11.6 million could be owing.

Moreover, condensate excise deductions totalling $705.1 million were claimed for the 18-month period, reducing royalty revenue by $88 million, although the report noted that the policy intent may well have been to allow such deductions.

"Many matters identified by the consultants have not yet been addressed ... such that the full extent of any errors in the calculation and payment of royalties has not been quantified."

The federal innovation department has agreed that an "accountability framework" should be developed and fuller documentary evidence kept, but added that "as resourced, neither [we nor the WA department] has the time or expertise to scrutinise deductions claimed in their entirety".


Acting WA director-general Tim Griffin said WA had not been given proper opportunity to contribute. "[My department's] royalty revenue verification processes are robust and adequate," he said in a written response to the report.

Greens treasury spokesman Peter Whish-Wilson said: "The ANAO has found that the royalty formula hasn't been reviewed in 17 years and that a number of the deductions worth billions claimed by companies aren't even on the allowable schedule under the Act."



Read more: http://www.copyright link/news/poli...shelf-royalties-20161128-gsz27q#ixzz4RHmbZDPH
Follow us: @FinancialReview on Twitter | financialreview on Facebook