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Tuesday, 3 February 2009
Page: 218

Senator Cormann asked the Minister representing the Minister for Resources and Energy, upon notice, on 19 December 2008:

(1)   Given the estimated $800 million in additional infrastructure investment required by Inpex Corporation as a result of the decision to process gas from the Browse Basin’s Ichthys gas field in Darwin rather than in Western Australia: (a) what will be the delay in commencement of Petroleum Resource Rent Tax payments from the Ichthys gas field as a result of this additional capital expenditure; and (b) what is the potential impact on Commonwealth revenue as a result of reduced petroleum resource rent tax flowing from the increase in project capital costs.

(2)   Given the media release by the Minister on 26 September 2008 which stated that, ‘The Australian Government is pleased Inpex has taken the decision today on a site in Darwin for its proposed LNG plant utilising gas from the Ichthys gas field in Western Australia’, did the Minister consider the reduced returns for the community through Commonwealth royalties from this project; if so, did the Minister take all possible steps to maximise returns to the community by attempting to ensure that the processing of the Ichthys gas field took place in Western Australia; if not, why did the Minister fail to assess the return to the community of a major development project which he travelled to Darwin to announce.

Senator Carr (Minister for Innovation, Industry, Science and Research) —The Minister for Resources and Energy has provided the following answers to the honourable senator’s question:

(1)   It is not possible to estimate delays or impacts on Petroleum Resource Rent Tax (PRRT) payments which may arise from the decision by the Ichthys joint venture partners (INPEX and Total) to locate its Ichthys LNG project in Darwin rather than in Western Australia. PRRT payments are affected by a wide range of variables. Producing such an estimate would require a detailed knowledge of the cost structure of both options for the LNG project and an accurate forecast of future spending and revenue, with revenue essentially being dependent on the oil price. Government, as a matter of course, is not privy to this level of commercial information from a project proponent in making commercial decisions on developments of this nature.

(2)   The decision making process undertaken for the type of major project represented by the Ichthys Project is complex and influenced by a range of factors and project risks. The entire Australian community benefits from project proponents making appropriate commercial decisions on project developments within a rigorous legal and regulatory framework. The Australian Government does not propose to direct project proponents in making these decisions.