Commonwealth Numbered Regulations - Explanatory Statements

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PETROLEUM EXCISE (PRICES) REGULATIONS (AMENDMENT) 1991 NO. 68

STATUTORY RULES 1991 No. 68

Issued by the Authority of the Minister of State for Resources

PETROLEUM EXCISE (PRICES) ACT 1987

PETROLEUM EXCISE (PRICES) REGULATIONS (AMENDMENT)

The purpose of the Act is to determine on a monthly basis a volume weighted average realised (i.e a VOLWARE) price for petroleum, which is used as the basis for determining excise payable under the Excise Tariff Act 1921.

The Act initially applied only to offshore areas producing excisable crude petroleum but as the Bass Strait producing region was the only region producing excisable petroleum, the Act was effectively confined to this region.

In the latter half of 1989, it became apparent that the Act would need to be extended to onshore regions producing excisable petroleum. This arose because cumulative production at the Jackson field in South West Queensland was approaching the 4767.3 megalitres (30 million barrel) excise exempt limit prescribed in the Excise Tariff Act 1921. As a result the Act was amended to widen its application so that a VOLWARE price could be determined for onshore regions producing excisable petroleum. On 21 December 1990, the Petroleum Excise (Prices) Amendment Act 1990, (the Amendment Act) which put these changes into effect, received the Royal Assent.

The proposed Regulations will provide for VOLWARE prices to be determined separately for different producing regions. The regions to be listed so that VOLWARE prices can be separately determined will be the Bass Strait and Jackson producing regions. The commencement date for Jackson will be 1 November 1990. The Bass Strait commencement date will be the first month of transactions for which a VOLWARE price was calculated, i.e 1 January 1988.

The calculation of separate VOLWARE prices for different producing regions is necessary to prevent inequities in excise liability. These inequities arise from the fact that the realised prices of crude oil from different sources have been observed to differ and hence there are direct implications for the excise payable. In effect those producers with lower realised prices would pay relatively more of the excise liability than those with higher realised prices if a combined VOLWARE price were used as the basis for excise liability.