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Thursday, 5 December 2013
Page: 1001


Senator CASH (Western AustraliaAssistant Minister for Immigration and Border Protection and Minister Assisting the Prime Minister for Women) (15:37): I move:

That these bills be now read a second time.

I seek leave to have the second reading speeches incorporated in Hansard.

Leave granted.

The speeches read as follows—

OFFSHORE PETROLEUM AND GREENHOUSE GAS STORAGE AMENDMENT (CASH BIDDING) BILL 2013

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

highly prospective geology,

quality pre-competitive 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 pre-competitive geoscience data—this information is prepared by Australia's national geoscience agency, Geoscience Australia.

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 already provides the authority for offshore petroleum exploration permits to be offered using a cash-bidding system, changes were required to optimise its use.

From 2014 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 over-exploration 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 pre-qualification 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.

 

OFFSHORE PETROLEUM AND GREENHOUSE GAS STORAGE (REGULATORY LEVIES) AMENDMENT BILL 2013

As the Australian government has announced that it will proceed with the inclusion of cash bidding in the 2014 offshore exploration acreage release.

This additional method of exploration permit allocation in mature areas or those known to contain petroleum accumulations is intended to prevent over-exploration where none or little may be required, and ensure that the release of these areas continues to be equitable, economic and efficient.

While use of cash bidding is already available in the Offshore Petroleum and Greenhouse Gas Storage Act 2006, I have introduced some amendments which will allow optimisation of the cash bidding system.

The National Offshore Petroleum Titles Administrator performs an important function in Australia's offshore petroleum regulatory regime.

The agency does this by assisting and advising the joint authority—and myself as the responsible Commonwealth minister—on the award of titles as well as managing the ongoing titles administration function including keeping registers of titles and data and information management.

This bill consequently amends the Offshore Petroleum and Greenhouse Gas Storage Act (Regulatory Levies) 2003 to allow the National Offshore Petroleum Titles Administrator to cost recover for its annual titles administration activities in relation to cash-bid petroleum exploration permits.

I commend this bill to the House.

Debate adjourned.