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Oil Markets Face Nightmare Scenario

Oil Markets Face Nightmare Scenario

Financial markets saw their worst…

Australia Says Big Oil Failed To Pay Billions In Taxes

Pipeline

Oil and gas companies operating in Australia are about to come under fire from the government, as the Treasury launches an investigation into taxes paid by the industry and seeks to make up for lost ground in what it deems were unpaid taxes by major oil and gas operator.

According to Treasurer Scott Morrison, revenues from the petroleum resource rent tax (PRRT) have halved since 2013, reaching around US$600 million (A$800 million), and that excise revenues have also fallen drastically.

Earlier this week, a report by the country’s Auditor-General revealed that the operators of just one oil and gas project – the biggest one, admittedly – had seen their way out of paying around US$3.7 billion (A$5 billion) in taxes by using various deductions, some of them ineligible. The operators in question include Chevron, Shell, BP, and Australia’s biggest independent oil and gas company, Woodside, along with BHP Billiton.

Woodside said that it was willing to fully cooperate with the authorities in their inquiry, with Reuters quoting the company as saying that “The oil and gas industry is under significant financial pressure from low commodity prices, therefore stability in tax arrangements is essential for our shareholders to support investment in uncertain business environments.”

Related: Will Trump Send Electricity Bills Soaring?

This echoes Morrison’s words that the investigation aims to improve the effectiveness and efficiency of the Australian oil and gas taxation system, rather than just collecting back-dated dues.

Australia’s oil and gas industry is worth some US$150 billion (A$200 billion), and includes massive projects such as the Chevron, BP, Shell, and Woodside-operated North West Shelf project, as well as Chevron’s Gorgon and Wheatstone LNG projects. BP last month announced it was exiting the Great Australian Bight where it explored for oil, but faced a lot of opposition and close scrutiny from environmental regulators.

Just like everywhere else, the oil and gas industry of Australia has suffered its fair share of lower revenues thanks to the oil price crash and the government investigation into taxes could add another woe to the troubled businesses if it leads to a reform in how royalties are being collected.

By Irina Slav for Oilprice.com

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