1Short title
This Act may be cited as the Petroleum Royalty Act 2023.
Bills and explanatory statements from legislation.nt.gov.au; second reading speeches from the NT Parliamentary Record (Territory Stories). Links open the official source in a new tab.
Bill homepage (legislation.nt.gov.au)This Act may be cited as the Petroleum Royalty Act 2023.
This Act commences on 1 July 2023.
The purpose of this Act is to provide for a royalty payable on petroleum produced from a project area.
In this Act:
allowable costs, see section 18.
approved means approved under section 25.
Australian Dollar Equivalent, see section 12(1).
Commissioner of Territory Revenue means the person holding or acting in the office of Commissioner of Territory Revenue under the Taxation Administration Act 2007.
deductible costs, see section 17.
deduction cap, for petroleum produced from a project area, means 75% of the sales value of the petroleum.
entity means any of the following:
a body corporate;
a partnership;
an unincorporated body;
an individual;
for a trust that has only one trustee – the trustee;
(f) for a trust that has more than one trustee – the trustees together.
exchange rate, see section 12(2).
excluded costs, see section 19.
exploration permit, see section 5(1) of the Petroleum Act 1984.
exploration permit area, see section 5(1) of the Petroleum Act 1984.
exploration project area means one or more exploration permit areas operated by or on behalf of one or more permittees as a single integrated project.
first saleable point, in relation to petroleum, means the earlier of:
(a) the point when the petroleum is first sold or disposed of in an open commercial market after production at the wellhead; and
(b) the point when the petroleum is processed into a petroleum product.
gross value at the wellhead, see section 13.
incurred means:
(a) in the case of a capital allowance deduction under section 18(1)(e) – incurred only at the time the cost or expense constitutes a deduction under the Income Tax Assessment Act 1997 (Cth); or
in the case of any other cost or expense – paid or payable.
licence, see section 5(1) of the Petroleum Act 1984.
licence area, see section 5(1) of the Petroleum Act 1984.
licensee, see section 5(1) of the Petroleum Act 1984.
market value, see section 15.
operator means:
(a) in the case of a licence – a person appointed by the licensee to undertake petroleum production in a licence area on behalf of the licensee; and
(b) in the case of an exploration permit – a person appointed by the permittee to undertake petroleum exploration or production in an exploration permit area on behalf of the permittee.
permittee, see section 5(1) of the Petroleum Act 1984.
petroleum, see section 5(1) of the Petroleum Act 1984.
petroleum facility means a facility that is:
located in the Territory downstream from a wellhead; and
(b) used for the processing, refining, storage or transport of petroleum.
Example for definition petroleum facility
A pipeline.
petroleum product means any product able to be sold or disposed of that is processed, extracted, recovered or derived from petroleum, including crude oil, condensate and processed natural gas.
post-wellhead activity means an activity that occurs after petroleum is produced at the wellhead in a project area and before its first saleable point.
post-wellhead facility means a petroleum facility used for a post‑wellhead activity.
processed natural gas includes liquefied natural gas.
produce, in relation to petroleum, see section 5(1) of the Petroleum Act 1984.
production licence, see section 5(1) of the Petroleum Act 1984.
production project area means:
(a) one or more licence areas operated by or on behalf of one or more licensees as a single integrated project to produce petroleum; or
(b) one or more licence areas operated, under one or more licences together with one or more exploration permits, by or on behalf of one or more licensees together with one or more permittees as a single integrated project to produce petroleum.
project area means:
an exploration project area; or
a production project area.
quarter means the 3-month period ending on the last day of March, June, September or December in any year.
related body corporate, in relation to a body corporate, see section 9 of the Corporations Act 2001 (Cth).
related entity, in relation to a body corporate, see section 9 of the Corporations Act 2001 (Cth).
related party, of a person, means:
a related body corporate of the person; or
a related entity of the person; or
(c) a joint venture or other entity that is led by the person or a related body corporate or related entity of the person.
retention licence, see section 5(1) of the Petroleum Act 1984.
royalty means the royalty payable under this Act on petroleum.
royalty year, in relation to a licensee or permittee, for a project area, means the 12-month period for which the accounts of the licensee or permittee are ordinarily made up.
sales value, see section 14.
shipping costs, see section 16.
third party, in relation to a person, means another person who is not a related party of the person.
well, see section 5(1) of the Petroleum Act 1984.
wellhead, see section 5(1) of the Petroleum Act 1984.
Note for section 4
The Interpretation Act 1978 contains definitions and other provisions that may be relevant to this Act.
A transaction entered into by a party is on arm's length terms if the terms of the transaction are no less favourable to the party than those that would be agreed to by a third party in an arm's length transaction under similar circumstances.
This Act also applies in relation to any lease granted or renewed under the Petroleum (Mining and Prospecting) Act 1954, that is in effect on 1 July 2023, and any holder of the lease, in the same manner as it applies to a licence and a licensee respectively.
(1) A royalty is payable under this Act on petroleum produced from a project area as follows:
(a) in the case of petroleum to which a royalty agreement applied immediately before 1 July 2023 – on and from the day the royalty agreement is terminated;
(b) in the case of petroleum to which a determination, made by the Minister under section 84(2) of the Petroleum Act 1984, applied immediately before 1 July 2023 – on and from the day the determination ends;
in any other case – on and from 1 July 2023.
In this section:
royalty agreement means an agreement that:
(a) was made between a licensee and the Minister under section 84(2) of the Petroleum Act 1984; and
was in force before 1 July 2023; and
(c) is about the gross value of petroleum produced from a licence area.
All licensees and permittees with a licence or exploration permit in a project area are liable to pay to the Territory a royalty on petroleum produced from the project area in the royalty year at the rate provided in section 9.
For subsection (1), petroleum produced from a project area includes petroleum, produced from a production project area, that is used or lost through venting or flaring or other means.
For subsection (1), petroleum produced from a project area does not include any of the following:
petroleum used by the licensee, permittee or operator for incidental purposes;
petroleum used in the project area for processing or compression, or preparing petroleum for sale;
petroleum returned or reinjected into a natural reservoir in the project area from which it was extracted or recovered;
petroleum produced from an exploration project area that is used or lost through venting or flaring or other means.
Examples for subsection (3)(a)
Heating and lighting buildings to provide employee accommodation or social amenities.
The royalty rate for petroleum produced from a project area is 10% of the gross value of the petroleum at the wellhead.
All licensees and permittees for a project area must pay the royalty for a royalty year:
by quarterly payments within 30 days after the end of each quarter; or
in accordance with any other arrangement the Commissioner of
Territory Revenue approves.
The quarterly payments, other than the final quarterly payment, of a royalty for a royalty year is calculated on the gross value at the wellhead of the petroleum produced in the quarter.
The calculation of the gross value at the wellhead under subsection (1) is determined in accordance with section 13 as if a reference in that section to the royalty year were a reference to a quarter.
The amount of the final quarterly payment for the royalty year is the balance of the royalty payable for the royalty year in accordance with the royalty return.
The Australian Dollar Equivalent, in relation to an amount of money that is stated in a foreign currency, means the amount determined by converting the foreign currency amount into
Australian dollars at the exchange rate applying at the time the foreign currency amount was earned, receivable or incurred.
The exchange rate, in relation to an amount of money that is stated in a foreign currency, means one of the following rates selected by the licensee, permittee or operator in good faith and on a consistent basis:
the closing daily representative rate for the relevant day, as published by the Reserve Bank of Australia;
the buy rate for the foreign currency, as quoted by a major
Australian trading bank;
another rate agreed in writing between the licensee or permittee and the Commissioner of Territory Revenue.
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