Queensland gas royalties: $100 million extra to flow to government after changes to billing methods

Almost $100 million in extra royalties will pour into government coffers every year, and Queenslanders’ gas bills should drop after the Palaszczuk Government announced it’s changing the way it bills gas companies for extracting the natural resource.

ALMOST $100 million in extra royalties will pour into government coffers every year and gas bills could fall after a change in the way Queensland taxes gas companies.

Treasurer Cameron Dick announced a long-awaited new petroleum royalty model for gas companies after more than a year of business uncertainty, with a new volumetric model locked in for five years from October 1.

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The much-anticipated news came after a $110,000 review by former SA Labor premier Jay Weatherill backed the government-favoured model over two others preferred by industry that would have delivered hundreds of millions of dollars less for taxpayers.

The volumetric model will apply a price per gigajoule that is calculated based on a tiered system, which cushions the impacts of low gas prices for companies, but delivers “super profits” for the state in good times.

A separate tier will see a lower rate applied to domestic gas to encourage investment and push down gas bills here.

Mr Weatherill’s report found the volume model, when compared to the current arrangement, would deliver about $94 million per annum more on average over the next nine years.

Up-to-date calculations that take into account market fluctuations caused by the COVID pandemic will be delivered in the government’s financial update in September.

Some companies will be hit harder than others under the changes, which will now replace individually-negotiated ‘Petroleum Royalty Decisions’ that saw some companies enjoy deals envied by their competitors.

Queensland Treasurer Cameron Dick announced the long-awaited new framework for gas companies after more than a year of business uncertainty. (AAP Image/Dan Peled)

Senex and Santos welcomed the certainty and fairness delivered by the deal, with Santos managing director Kevin Gallagher predicting it would “help put downward pressure on gas prices”.

But while some were last night celebrating, others were considering what it would mean for their regional workforces and shareholders as they find the extra cash.

Mr Dick said the government wanted to create more jobs and secure affordable domestic supply.

“This review has been crucial in ensuring that oil and gas companies are treated fairly and that Queenslanders receive their fair share of royalties from this important industry,” he said.

Queensland Resources Council chief executive Ian Macfarlane called for the 5-year freeze to be doubled to 10 and said the industry would have preferred the government to have continued consultations to better develop the new model.

“QRC will continue to work with its gas members to ensure the Government’s new royalty arrangements are workable and do not detract from their planned investment and employment, particularly in the COVID-19 recovery,” he said.

The review was triggered by a June 2019 decision by former treasurer Jackie Trad to lift the royalty rate from 10 per cent to 12.5 per cent angered the industry, and after a shock court case win by Australia Pacific LNG last May found a 2005 Petroleum Royalty Decision was invalid.