Benefits from Regulatory Reform in Upstream Petroleum Sector

Reforms designed to remove unnecessary regulatory burdens on the upstream petroleum sector have the potential to provide significant benefits to both the sector and the broader community, according to a new report by the Productivity Commission.

The report - Review of Regulatory Burden on the Upstream Petroleum (Oil and Gas) Sector - examines Australia's regulatory framework for oil and gas projects involving more than one jurisdiction.

The report concludes that current regulatory requirements are overly complex, often overlapping and duplicative, and that collectively they impose significant unnecessary burdens.

Commissioner Philip Weickhardt observed that 'there is widespread agreement among both government and industry that cutting the time taken to approve major projects by 50 per cent is achievable and desirable, but it will require the elimination of many of the current duplicative processes between the Australian and State and Territory Governments.'

He added 'there is no 'silver bullet' for reducing delays. A suite of reforms is required.'

A key recommendation is the establishment of a national offshore petroleum regulator. States and Territories would be able to 'opt-in' and transfer their responsibilities in State and Territory waters and for pipelines.

Other proposals aim to streamline existing arrangements through greater use of statutory timelines and improved reporting of performance to improve transparency and accountability, and also by introducing a lead agency within the States and the Northern Territory for petroleum approval processes.

Given the size of the upstream petroleum sector, with some individual projects requiring investment of tens of billions of dollars, the report found reducing unnecessary regulatory burdens could provide gains to the community amounting to billions of dollars each year. These would come principally through reducing delays which increase project costs, reduce flexibility in responding to market conditions, impede the financing of projects, and defer production and revenues.