Save Search

Note: Where available, the PDF/Word icon below is provided to view the complete and fully formatted document
 Download Current HansardDownload Current Hansard    View Or Save XMLView/Save XML

Previous Fragment    Next Fragment
Wednesday, 20 November 2013
Page: 756


Mr IAN MACFARLANE (GroomMinister for Industry) (09:32): I move:

That this bill be now read a second time.

Australia's exploration and mining success is underpinned by its:

highly prospective geology,

quality precompetitive geoscience data,

a stable investment environment, and

established regulatory frameworks.

Each year the Australian government releases offshore exploration acreage for competitive bidding by prospective explorers. Release areas are accompanied by an extensive package of precompetitive geoscience data—this information is prepared by Australia's national geoscience agency, Geoscience Australia, which I have to say is amongst the best, if not the best, in the world.

The areas released are selected to offer the global petroleum exploration industry a variety of investment opportunities.

This regular release of acreage provides Australia with a 'pipeline' of exploration investment opportunities—an essential component of ensuring Australia retains its attractiveness as a premier investment destination for the oil and gas industry.

Currently, Australia's offshore petroleum acreage is allocated through a competitive work-bidding system—essentially a tender system. Under this system the right to explore is awarded to those who will undertake the most comprehensive program of exploration work.

This system has served and will continue to serve Australia's interests for frontier areas and basins where the geology is less understood.

While the act provides the authority for offshore petroleum exploration permits to be offered using a cash-bidding system from 2014, the government will implement cash bidding as an additional method for exploration permit allocations.

Cash bidding will be used for those areas that are mature in exploration terms, or are known to contain petroleum accumulations.

Cash bidding in these areas is intended to prevent overexploration where none or little may be required. It also supports the government's policy of enabling the earliest commercialisation of our resources.

By introducing cash bidding, the government will ensure that the Australian community receives an up-front share of the economic benefit derived from having the exclusive right to explore for petroleum in Australia's offshore areas.

Offshore petroleum exploration permits do not, of themselves, authorise petroleum exploration activities. Rather an exploration permit grants the titleholder the exclusive right, in the area for which the permit is granted, to apply for permission to undertake exploration activities that are judged by environmental and other regulators to comply with the law.

An extensive review of the cash-bidding process, and consideration of preferred options, identified several opportunities to improve the current legislation.

To this end the bill implements a number of important measures that are aimed at improving efficiency of the allocation and the integrity of administrative processes, including:

enabling a reserve price to be set in advance of bids being received. This will ensure the government does not sell the right to explore below its value and secures an appropriate and adequate return to the Australian community.

requiring prequalification of bidders to ensure that potential explorers have the requisite technical and financial capacity to undertake exploration in an offshore area.

encouraging serious and genuine bidding through the requirement to pay a 10 per cent deposit when a cash bid is placed. This deposit is forfeited if the offer of a permit is subsequently refused.

specifying a non-discretionary tie-breaker mechanism which comes into effect in the event that two or more cash bids are equal.

Once fully implemented, these necessary key features will optimise the existing cash-bidding system provided for in the act. They will create a more streamlined and efficient allocation of exploration permits, which is consistent with the government's commitment to ensuring Australia is an attractive investment destination.

I note that the opposition has previously supported the introduction of cash bidding to encourage more efficient allocation of Australia's offshore resources. This bill is central to achieving that objective.

I commend this bill to the House.

Debate adjourned.