Compilation #6 | Effective 2016-03-05
FRBR Work URI: /akn/au/act/2006/18
This Act may be cited as the Offshore Petroleum (Royalty) Act 2006.
Each provision of this Act specified in column 1 of the table commences, or is taken to have commenced, in accordance with column 2 of the table. Any other statement in column 2 has effect according to its terms.
Note: This table relates only to the provisions of this Act as originally passed by the Parliament and assented to. It will not be expanded to deal with provisions inserted in this Act after assent.
Column 3 of the table contains additional information that is not part of this Act. Information in this column may be added to or edited in any published version of this Act.
Chapter 1 of the Offshore Petroleum and Greenhouse Gas Storage Act 2006 applies to this Act in a corresponding way to the way in which it applies to the Offshore Petroleum and Greenhouse Gas Storage Act 2006.
Note: This means, for example, that the definitions in Offshore Petroleum and Greenhouse Gas Storage Act 2006 apply to this Act.section 7 of the
In this Act:
month means one of the 12 months of a year.
Shelf exploration permit means one of the North West Shelf exploration permits as defined by section 2 of the Petroleum Resource Rent Tax Assessment Act 1987.
North West Shelf production licence means a petroleum production licence that, under the Petroleum Resource Rent Tax Assessment Act 1987, is related to a North West Shelf exploration permit.
North West Shelf retention lease means a petroleum retention lease that, under the Petroleum Resource Rent Tax Assessment Act 1987, is related to a North West Shelf exploration permit.
primary petroleum production licence has the same meaning as in Schedule 4 to the Offshore Petroleum and Greenhouse Gas Storage Act 2006.
royalty means royalty payable under section 5.
royalty period, in relation to a North West Shelf exploration permit, a North West Shelf retention lease or a North West Shelf production licence, means:
the period beginning on:
the day on which the permit, lease or licence comes or came into force; and
ending at the end of the month in which that day occurs; and
each later month.
secondary petroleum production licence has the same meaning as in Schedule 4 to the Offshore Petroleum and Greenhouse Gas Storage Act 2006.
State Minister means the responsible State Minister of Western Australia.
value has the meaning given by section 12.
wellhead has the meaning given by section 11.
Note: See also section 15, which deals with provisional value.
The registered holder of:
a North West Shelf exploration permit; or
a North West Shelf retention lease; or
a North West Shelf production licence;
is liable to pay a royalty on all petroleum recovered by the holder in the permit area, lease area or licence area in a royalty period beginning at or after the commencement of this section.
Note 1: For exemptions, see section 10.
Note 2: For collection of royalty, see Offshore Petroleum and Greenhouse Gas Storage Act 2006.Part 6.7 of the
The rate of royalty on petroleum recovered under a petroleum production licence is worked out using the table:
Application for secondary petroleum production licence—determination of rate of royalty
If:
a person has applied for a primary petroleum production licence; and
before or after the grant of the primary petroleum production licence, the person applies for a secondary petroleum production licence;
the Joint Authority must, by written instrument, determine the rate of royalty payable in relation to petroleum recovered, whether under the primary petroleum production licence or under the secondary petroleum production licence.
The rate must not be less than 11%, nor more than 12.5%, of the value at the wellhead of that petroleum.
Before determining the rate of royalty payable, the Joint Authority must:
give the person an opportunity to confer with the State Minister about the rate; and
give the State Minister an opportunity to report to the Joint Authority about any such conferring; and
consider the State Minister’s report.
A determination under subsection (2) is not a legislative instrument.
Royalty at the prescribed rate
A reference in a petroleum production licence (whether granted before or after the commencement of this subsection) to:
royalty at the prescribed rate; or
royalty at the rate that is for the time being the prescribed rate;
is to be read as a reference to royalty at the rate that is or was the rate of royalty applicable in accordance with the provisions of this Act, as in force from time to time.
The rate of royalty on petroleum recovered under a petroleum exploration permit is 10% of the value at the wellhead of the petroleum.
Royalty at the prescribed rate
A reference in a petroleum exploration permit (whether granted before or after the commencement of this subsection) to:
royalty at the prescribed rate; or
royalty at the rate that is for the time being the prescribed rate;
is to be read as a reference to royalty at the rate that is or was the rate of royalty applicable in accordance with the provisions of this Act, as in force from time to time.
The rate of royalty on petroleum recovered under a petroleum retention lease is 10% of the value at the wellhead of the petroleum.
Royalty at the prescribed rate
A reference in a petroleum retention lease (whether granted before or after the commencement of this subsection) to:
royalty at the prescribed rate; or
royalty at the rate that is for the time being the prescribed rate;
is to be read as a reference to royalty at the rate that is or was the rate of royalty applicable in accordance with the provisions of this Act, as in force from time to time.
Scope
This section applies if the State Minister is satisfied that the rate of recovery of petroleum from a well has become so reduced that, having regard to the rate or rates of royalty applicable under section 6, 7 or 8, further recovery of petroleum from that well would be uneconomic.
Reduction of royalty
The Joint Authority may, by written instrument, determine that the royalty in relation to any or all of the petroleum recovered from that well on or after a date specified in the determination is to be such lower rate as is specified in the determination.
The Joint Authority may, by written instrument, revoke or vary a determination under subsection (2), and the revocation or variation applies to petroleum recovered on or after such date as is specified in the instrument.
A determination under subsection (2) has effect despite section 6, 7 or 8.
Royalty under this Act:
is not payable in relation to petroleum that the State Minister is satisfied was unavoidably lost before the quantity of that petroleum was ascertained; and
is not payable in relation to petroleum if:
the State Minister is satisfied that the petroleum was used by the registered holder of the petroleum exploration permit, petroleum retention lease or petroleum production licence for the purposes of petroleum exploration operations or operations for the recovery of petroleum; and
(ii) the use did not contravene the Offshore Petroleum and Greenhouse Gas Storage Act 2006 or regulations under that Act; and
is not payable in relation to petroleum if:
the State Minister is satisfied that the petroleum has been flared or vented in connection with operations for the recovery of petroleum; and
(ii) the flaring or venting did not contravene the Offshore Petroleum and Greenhouse Gas Storage Act 2006 or regulations under that Act.
If petroleum has been recovered by the registered holder of:
a petroleum exploration permit; or
a petroleum retention lease; or
a petroleum production licence;
royalty under this Act is not payable in relation to the petroleum because of that recovery if:
the State Minister is satisfied that the petroleum has been returned to a natural reservoir; and
(e) the return of the petroleum to the reservoir did not contravene the Offshore Petroleum and Greenhouse Gas Storage Act 2006 or regulations under that Act.
Subsection (2) does not affect the liability of that or any other registered holder to pay royalty in relation to petroleum that is recovered from that natural reservoir.
For the purposes of this Act, the wellhead, in relation to any petroleum, is:
such valve station as is agreed between:
the registered holder of the petroleum exploration permit, petroleum retention lease or petroleum production licence; and
the State Minister; or
if there is no agreement within such period as the State Minister allows—such valve station as the State Minister determines to be that wellhead.
For the purposes of this Act, the value at the wellhead of any petroleum is:
such amount as is agreed between:
the registered holder of the petroleum exploration permit, petroleum retention lease or petroleum production licence; and
the State Minister; or
if there is no agreement within such period as the State Minister allows—such amount as the State Minister determines to be that value.
For the purposes of this Act, the quantity of petroleum recovered by the registered holder of a petroleum exploration permit, petroleum retention lease or petroleum production licence from a well during a period is taken to be:
the quantity measured during that period by a measuring device:
approved by the State Minister; and
installed at the wellhead or at such other place as the State Minister approves; or
if:
no such measuring device is so installed; or
the State Minister or the Joint Authority is not satisfied that the quantity of petroleum recovered by the registered holder from that well has been properly or accurately measured by such a measuring device;
the quantity determined by the State Minister as being the quantity recovered by the registered holder from that well during that period.
The Joint Authority must give directions to the State Minister about the manner in which the State Minister is to exercise the powers conferred by sections 11, 12 and 13.
A direction under subsection (1) must relate to a particular petroleum exploration permit, petroleum retention lease or petroleum production licence.
The State Minister must comply with a direction under subsection (1).
A direction under subsection (1) is not a legislative instrument.
If, in relation to petroleum recovered during a royalty period, the value of the petroleum has not been agreed or determined under section 12, the State Minister may determine a provisional value.
If:
a provisional value of any petroleum has been determined under subsection (1); and
the value of that petroleum has not yet been agreed or determined under section 12;
this Act has effect, in relation to that petroleum, as if:
the provisional value of the petroleum were its value; and
the determination of the provisional value were an agreement or determination under section 12.
Scope
This section applies if:
subsection 15(2) has operated in relation to petroleum recovered during a royalty period, and a value of the petroleum different from the provisional value is subsequently agreed or determined under section 12; or
an error has been made in:
the calculation of royalty due; or
the application of a procedure for ascertaining the value of the petroleum.
Adjustment
If the determined royalty is greater than the provisional royalty, the difference is payable by the registered holder concerned.
If the determined royalty is less than the provisional royalty, the difference is to be:
deducted from any amount subsequently payable under this Act by the registered holder concerned; or
if no amount is likely to be subsequently payable under this Act by the registered holder concerned—refunded to the registered holder.
Definitions
In this section:
determined royalty means:
if paragraph (1)(a) applies—the amount of royalty payable in relation to the petroleum on the basis of the value ascertained under section 12; or
if paragraph (1)(b) applies—the amount of royalty payable in relation to the petroleum.
provisional royalty means:
if paragraph (1)(a) applies—the amount of royalty payable in relation to the petroleum on the basis of the provisional value; or
if paragraph (1)(b) applies—the amount of royalty demanded in relation to the petroleum as a result of the erroneous:
calculation of royalty due; or
application of a procedure for ascertaining the value of the petroleum.
The State Minister may, by written instrument, delegate to an employee of Western Australia any or all of the powers or functions of the State Minister under this Act.
Schedule 1 has effect.