The Minister for Resources and Energy, Martin Ferguson AM MP, has released a discussion paper outlining possible changes to Australia's oil and gas retention lease regime, which will boost Australian production and energy security.
The discussion paper presents technical options for the administration of the retention lease regime and aims to better balance the national interest with the commercial interests of oil and gas producers.
In 1990, less than 4 per cent of the Commonwealth's offshore gas titles were held under retention leases, but by 2000, this figure had grown to 29 per cent. Last year, more than 40 per cent of the titles were held in retention leases.
Minister Ferguson said: "This paper is great step forward and provides an opportunity for the industry to provide input and make suggestions over the next two months.
"The Commonwealth has an obligation to unlock the wealth of Australia's vast petroleum resources for the benefit of all Australians.
"The challenge we face is to realign the national interest of Australia with the commercial interest of investors. I have already flagged that my Department and I will apply a 'use it or lose it' principle to retention lease applications. That means we will rigorously apply the commerciality test to ensure gas fields are developed at the earliest possible times.
"The Government remains strongly committed to open and transparent investment regime, but we have to get the balance right.
"The Australian Commonwealth owns extensive, world-class gas reserves, yet our low sovereign risk means there is sometimes less incentive to develop these reserves.
"Few countries can match Australia's economic stability, first-world investment-ready regulatory regime, and abundance of natural resources.
"Australia is one of the most desirable investment locations in the world, so it makes sense that companies would see Australia as a safe harbour, especially in these troubled economic times.
"Australia's political stability can see our resources put to the back of the queue in terms of development planning, as companies choose to 'get in and get out' of nations with greater sovereign risk, knowing their Australian titles can be warehoused and kept for a rainy day.
"However, our economic strength and political stability should not be allowed to continue to work to Australia's detriment."