Commonwealth Numbered Regulations - Explanatory Statements

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PETROLEUM EXCISE (PRICES) REGULATIONS (AMENDMENT) 1997 NO. 166

STATUTORY RULES 1997 No. 166

Issued by the Authority of the Minister for Resources and Energy

Petroleum Excise (Prices) Act 1987

Petroleum Excise (Prices) Regulations (Amendment)

Section 14 of the Petroleum Excise (Prices) Act 1987 (the Act) provides that the GovernorGeneral may make regulations for the purposes of the Act.

Section 4 of the Acts Interpretation Act 1901 allows for the making of regulations after Royal Assent of an Act has been granted but before the Act begins operation. The Petroleum Excise (Prices) Amendment Act 1997 and the Excise Tariff Amendment Act (No. 2) 1997 are due to commence on 1 July 1997.

The purpose of these Regulations is to simplify the calculation of the price base of crude oil excise, following amendments to the Excise Tariff Act 1921 and the Petroleum Excise (Prices) Act 1987. The simplifications remove the need to calculate a 'reference price' for the month ahead and remove the need to calculate prices when production levels are too low to attract an excise liability.

The purpose of the Petroleum Excise (Prices) Act 1987 is to determine, on a monthly basis for each excisable oil producing region, a volume weighted average, realised (that is, a VOLWARE) price for stabilised crude oil. The VOLWARE price is used as the basis for determining excise payable under the Excise Tariff Act 1921. VOLWARE prices are determined for oil producing regions that contain a production area which has exceeded cumulative production of 4767.3 Megalitres (30 million barrels). The amount of excise payable is based on annual production levels, with a zero rated first tranche annual production of 500 Megalitres, and increasing rates of excise at various production levels after this.

The Petroleum Excise (Prices) Amendment Act 1997 (the Amendment Act), as part of a package with the Excise Tariff Amendment Act (No. 2) 1997 , removes the necessity to determine VOLWARE prices for oil producing regions that contain production areas which have an annual production rate consistently lower than 500 Megalitres, and hence attracts no excise liability.

The Amendment Act also removes the requirement to calculate and determine a 'reference price' for each oil producing region for the month ahead. This reference price was used as the first approximation for the value of crude oil produced from each region. The Excise Tariff Amendment Act (No. 2) 1997 changed the collection of excise from three times each month to monthly. This removes the need for a reference price to be determined. Because the change to monthly collection causes the crude oil producers' excise liability to occur after receipt of their payment for sales, there is now no need for credit compensation for interest foregone for payments received within thirty days of sales.

Details of the Regulations are set out below.

Regulation 1 sets a commencement date of 1 July 1997 to coincide with the commencement date of the Amendment Acts.

Regulation 3 omits the definition of the source of oil price information, as this information is no longer required.

Regulation 4 clarifies the definition of 'oil producing region' and 'production area'.

Regulation 5 omits the definition and method of calculation of 'reference price' as this price will not be required under the changes to the excise collection regime introduced in the Amendment Acts.

Regulation 6 clarifies the type of information required to be submitted by excisable crude oil producers for the calculation of excise liability.

Regulation 7 modifies the equation which calculates the amount of compensation for fore-one interest to be applied in calculating the price base for crude oil excise liability.